THE NEAR-MYOPIC NATURE OF THE LAGGED PROPORTIONAL COST INVENTORY PROBLEM WITH LOST SALES.
CARNEGIE-MELLON UNIV PITTSBURGH PA MANAGEMENT SCIENCES RESEARCH GROUP
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A considerable literature has been devoted to periodic review inventory problems with proportional ordering costs and known independent demand distributions, due to the optimality under broad conditions of base stock policies. An important exception is the case when order delivery is lagged and excess demand is simply lost, which is more complicated. By further restricting holding and penalty costs to be proportional, the author has extended preliminary work by others to obtain good bounds for both the optimal order policy and the associated minimum expected discounted cost function for the stationary problem. An extension of the model to a partial backlogging situation is presented for which optimal policies may be considered myopoid. Author
- Logistics, Military Facilities and Supplies
- Operations Research