Optimal inventory decisions in a multiperiod newsvendor problem with partially observed Markovian supply capacities

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journalpeer-review

12 Scopus Citations
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Author(s)

Detail(s)

Original languageEnglish
Pages (from-to)502-517
Journal / PublicationEuropean Journal of Operational Research
Volume202
Issue number2
Publication statusPublished - 16 Apr 2010
Externally publishedYes

Abstract

This paper considers a multi-period news-vendor problem with partially observed supply-capacity information which evolves as a Markovian Process. The supply capacity is fully observed by the buyer when the capacity is smaller than the buyer's ordering quantity. Otherwise, the buyer knows that the current-period supply capacity is greater than its ordering quantity. Based on these two observations, the buyer updates the future supply-capacity forecasting accordingly. With a dynamic programming formulation, we prove the existence of an optimal ordering policy. We also prove that the optimal order quantity is greater than the myopic order quantity. © 2009 Elsevier B.V. All rights reserved.

Research Area(s)

  • Capacity learning, Inventory planning and control, Markovian process, Partial information