Forecast horizons for the discounted dynamic lot‐size problem allowing speculative motive

James C. Bean, Robert L. Smith and Candace A. Yano

Naval Research Logistics (NRL), 1987, vol. 34, issue 6, 761-774

Abstract: This article considers the dynamic lot‐size problem under discounting, allowing speculative motive for holding inventory. A variable rolling‐horizon procedure is presented, which, under certain regularity conditions, is guaranteed to generate an infinite‐horizon optimal‐production plan. We also discuss a fixed rolling‐horizon procedure which provides a production plan that achieves an infinite‐horizon cost within a user‐specified tolerance ϵ of optimality. The fixed‐horizon length T* needed in this procedure is given in terms of a closed‐form formula that is independent of specific forecasted demands. We also present computational results for problems with a range of cost parameters and demand characteristics.

Date: 1987
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https://doi.org/10.1002/1520-6750(198712)34:63.0.CO;2-X

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Persistent link: https://EconPapers.repec.org/RePEc:wly:navres:v:34:y:1987:i:6:p:761-774

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