Optimal inventory decisions in a multiperiod newsvendor problem with partially observed Markovian supply capacities

Haifeng Wang, Bocheng Chen and Houmin Yan

European Journal of Operational Research, 2010, vol. 202, issue 2, 502-517

Abstract: This paper considers a multi-period news-vendor problem with partially observed supply-capacity information which evolves as a Markovian Process. The supply capacity is fully observed by the buyer when the capacity is smaller than the buyer's ordering quantity. Otherwise, the buyer knows that the current-period supply capacity is greater than its ordering quantity. Based on these two observations, the buyer updates the future supply-capacity forecasting accordingly. With a dynamic programming formulation, we prove the existence of an optimal ordering policy. We also prove that the optimal order quantity is greater than the myopic order quantity.

Keywords: Partial; information; Markovian; process; Inventory; planning; and; control; Capacity; learning (search for similar items in EconPapers)
Date: 2010
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:202:y:2010:i:2:p:502-517

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