Analysis of perishable-inventory systems with censored demand data

Journal Article (Journal Article)

We consider a multiperiod inventory system of a perishable product with unobservable lost sales. Demand distribution parameters are unknown and are updated periodically using the Bayesian approach based on the censored historical sales data. We develop an explicit expression of the first-order condition for optimality that demonstrates the key trade-off of the problem. The result generalizes partial characterizations of this trade-off in the literature. It shows that the myopic solution is a lower bound on the optimal inventory level. It also enables us to quantify the expected marginal value of information. © 2008 INFORMS.

Full Text

Duke Authors

Cited Authors

  • Lu, X; Song, JS; Zhu, K

Published Date

  • July 1, 2008

Published In

Volume / Issue

  • 56 / 4

Start / End Page

  • 1034 - 1038

Electronic International Standard Serial Number (EISSN)

  • 1526-5463

International Standard Serial Number (ISSN)

  • 0030-364X

Digital Object Identifier (DOI)

  • 10.1287/opre.1080.0553

Citation Source

  • Scopus