INVENTORY MODEL WITH LIMITED PRODUCTION CAPACITY AND UNCERTAIN DEMANDS. II. THE DISCOUNTED-COST CRITERION.
This paper considers a single-item, periodic-review inventory model with uncertain demands. We assume a finite production capacity in each period. With stationary data, a convex one-period cost function and a continuous demand distribution, we show (under a few additional unrestrictive assumptions) that a modified basic-stock policy is optimal under the discounted cost criterion, both for finite and infinite planning horizons. In addition we characterize the optimal base-stock levels in several ways.
- Federgruen, A; Zipkin, P
- Mathematics of Operations Research
Volume / Issue
- 11 / 2
Start / End Page
- 208 - 215