Computing optimal (s, S) policies in inventory models with continuous demands

Published

Journal Article

Special algorithms have been developed to compute an optimal (s, S) policy for an inventory model with discrete demand and under standard assumptions (stationary data, a well-behaved one-period cost function, full backlogging and the average cost criterion). We present here an iterative algorithm for continuous demand distributions which avoids any form of prior discretization. The method can be viewed as a modified form of policy iteration applied to a Markov decision process with continuous state space. For phase-type distributions, the calculations can be done in closed form.

Full Text

Duke Authors

Cited Authors

  • Federgruen, A; Zipkin, P

Published Date

  • June 1, 1985

Published In

Volume / Issue

  • 17 / 02

Start / End Page

  • 424 - 442

Published By

Electronic International Standard Serial Number (EISSN)

  • 1475-6064

International Standard Serial Number (ISSN)

  • 0001-8678

Digital Object Identifier (DOI)

  • 10.2307/1427149

Language

  • en