 Discrete‐item inventory control involving unknown censored demand and convex inventory costsJian Yang and Jim (Junmin) Shi Production and Operations Management, 2023, vol. 32, issue 1, 45-64 Abstract: We study inventory control involving lost sales and hence censored demand. In a long‐run average framework, the demand distribution is largely unknown. As long as the stationary inventory costs are strictly convex to the extent that the second lost item costs strictly more than the first one, the regret would be Ω(T2/3)$\Omega (T^{2/3})$. Our discrete‐item setting has rendered the presence or absence of strong censoring indicators or equivalently, being knowledgeable or ignorant of one more demand request after the depletion of the inventory, a critical issue and any gradient‐based method designed for the continuous‐item case ineffective. We propose a policy that deliberately orders up to very high levels in designated learning periods and in the remaining doing periods, uses base‐stock levels tailored to near‐empirical distributions formed over the learning periods. A matching O(T2/3)$O(T^{2/3})$ upper bound can be achieved by this policy. The results can hold even when items are nonperishable. Numerical experiments further illustrate the relative competitiveness of our separate learning‐doing policy. Date: 2023 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:bla:popmgt:v:32:y:2023:i:1:p:45-64 Ordering information: This journal article can be ordered from Access Statistics for this article Production and Operations Management is currently edited by Kalyan Singhal More articles in Production and Operations Management from Production and Operations Management Society |
Is your work missing from RePEc? Here is how to contribute.
Questions or problems? Check the EconPapers FAQ or send mail to .
EconPapers is hosted by the
School of Business at Örebro University.