A COMPARATIVE ANALYSIS OF THE BAYES INVENTORY POLICY
PLANNING RESEARCH CORP LOS ANGELES CA
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Three kinds of provisioning policies are postulated and compared a Bayes policy, a dynamic programming policy based on initial demand estimate only, and a dynamic programming policy with periodic recomputation using revised demand forecasts based upon an average of past demands. Cost comparisons are made by simulating in a Monte Carlo sense the use of the different policies for several values of estimated mean demand and shortage cost to unit cost ratios, and for various values of actual demand less than and greater than the estimated demand. Based upon the parameter values chosen, and under the limitations and assumptions of the study, the Bayes policy appears superior less cost when demand is underestimated, particularly for high values of the shortage cost to unit cost ratio. The dynamic programming policies are superior when demand is overestimated, with little difference between the two kinds of dynamic pro gramming policies.
- Logistics, Military Facilities and Supplies