Equivalent Formulations of the Stochastic Cash Balance Problem

Evan L. Porteus
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Evan L. Porteus: Stanford University

Management Science, 1972, vol. 19, issue 3, 250-253

Abstract: This paper shows that the widely appearing "marginal cost" formulations of the dynamic, periodic review, stochastic cash balance problem are equivalent to a "total cost" formulation, as long as the holding, shortage cost, and "closing of account" functions are constructed correctly.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:inm:ormnsc:v:19:y:1972:i:3:p:250-253

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