Optimal Inventory Policies When Sales Are Discretionary

Herbert Scarf

No 1270, Cowles Foundation Discussion Papers from Cowles Foundation for Research in Economics, Yale University

Abstract: Inventory models customarily assume that demand is fully satisfied if sufficient stock is available. We analyze the form of the optimal inventory policy if the inventory manager can choose to meet a fraction of the demand. Under classical conditions we show that the optimal policy is again of the (S,s) form. The analysis makes use of a novel property of K-concave functions.

Keywords: Inventory theory; optimal ordering policies; (S; s) policies; K-concavity (search for similar items in EconPapers)
JEL-codes: C12 C13 (search for similar items in EconPapers)
Pages: 10 pages
Date: 2000-08
Note: CFP 1104.
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published in International Journal of Production Economics (January 2005), 93-94: 111-119

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