Finding Optimal (s, S) Policies Is About As Simple As Evaluating a Single Policy

Yu-Sheng Zheng and A. Federgruen
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Yu-Sheng Zheng: University of Pennsylvania, Philadelphia, Pennsylvania
A. Federgruen: Columbia University, New York, New York

Operations Research, 1991, vol. 39, issue 4, 654-665

Abstract: In this paper, a new algorithm for computing optimal ( s , S ) policies is derived based upon a number of new properties of the infinite horizon cost function c ( s , S ) as well as a new upper bound for optimal order-up-to levels S * and a new lower bound for optimal reorder levels s *. The algorithm is simple and easy to understand. Its computational complexity is only 2.4 times that required to evaluate a (specific) single ( s , S ) policy. The algorithm applies to both periodic review and continuous review inventory systems.

Keywords: inventory/production; policies: efficient algorithm for optimal (s; S) policy; inventory/production; stochastic: efficient algorithm for optimal (s; S) policy (search for similar items in EconPapers)
Date: 1991
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