Biased Variance Estimators for Statistical Inventory Policies.
YALE UNIV NEW HAVEN CONN SCHOOL OF ORGANIZATION AND MANAGEMENT
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In practice, scientific inventory decisions frequently are based on statistical estimates of the mean mu and variance s sup 2 of demand. This report examines the efficacy of modified variance estimates of the form betas sup 2, where the scaling factor beta is selected according to the criterion of minimizing expected total operating cost per period. Simulation experiments are run with a number of economic parameter settings for both cases of known and statistically estimated mean, and the value of using a beta value other than unity is assessed.
- Administration and Management
- Statistics and Probability