A Markovian Decision Model for a Joint Replacement and Stocking Problem

C. Derman and G. J. Lieberman
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C. Derman: Stanford and Columbia Universities; Stanford University
G. J. Lieberman: Stanford and Columbia Universities; Stanford University

Management Science, 1967, vol. 13, issue 9, 609-617

Abstract: Two important classes of problems encountered by industry and government are those dealing with replacement policies and ordering policies. These problems are usually treated separately. A particular model which treats the replacement and stocking problems as one is considered in this paper. It is formulated as a denumerable state Markovian decision model. It is shown that the optimal decision policy has a particular structure. In attaining the optimal policy, this structure is exploited so that an optimal policy can be obtained in a finite number of steps.

Date: 1967
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:13:y:1967:i:9:p:609-617

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