Finding optimal policies in the (S - 1, S ) lost sales inventory model with multiple demand classes

Willem van Jaarsveld and Rommert Dekker

No EI 2009-14, Econometric Institute Research Papers from Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute

Abstract: This paper examines the algorithms proposed in the literature for finding good critical level policies in the (S-1,S) lost sales inventory model with multiple demand classes. Our main result is that we establish guaranteed optimality for two of these algorithms. This result is extended to different resupply assumptions, such as a single server queue. As a corollary, we provide an alternative proof of the optimality of critical level policies among the class of all policies.

Keywords: customer differentiation; inventory; multiple demand classes; rationing lost sales; stochastic dynamic programming (search for similar items in EconPapers)
Date: 2009-07-23
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