Bayes adaptive control of two‐echelon inventory systems i: development for a special case of one‐station lower echelon and monte carlo evaluation

S. Zacks and J. Fennell

Naval Research Logistics Quarterly, 1972, vol. 19, issue 1, 15-28

Abstract: Bayes adaptive control policies are developed in the present paper for the special case of a one‐station lower echelon: a Poisson distribution of demand, whose mean is assumed to have a prior gamma distribution. The cost structure is of a common type. The ordering policy for the upper echelon, which minimizes expected cost, is replaced by a new type of policy, called Bayes prediction policy. This policy does not require tedious computations, of the sort required by dynamic programming solutions. The characteristics of the policies are studied by Monte Carlo simulation, and supplemented by further theoretical development.

Date: 1972
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Persistent link: https://EconPapers.repec.org/RePEc:wly:navlog:v:19:y:1972:i:1:p:15-28

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