Optimal policies for inventory systems with concave ordering costs

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

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Detail(s)

Original languageEnglish
Pages (from-to)291-302
Journal / PublicationNaval Research Logistics
Volume65
Issue number4
Online published23 Sep 2018
Publication statusPublished - 2018

Abstract

In this paper we study the structure of optimal policies for periodic review inventory systems with concave ordering costs and general demand distributions. By extending the Scarf (1959) model to systems with piecewise linear concave ordering costs, we show that, except for a bounded region, the generalized (s, S) policy is optimal. We do so by (a) introducing the notion of c-convexity and (b) proving a conditional monotonicity property for the optimal order-up-to levels. We also provide conditions under which the generalized (s, S) policy is optimal for all regions of the state space.

Research Area(s)

  • (s, S) Policy, c-convexity, dynamic programming, generalized, inventory/production systems

Citation Format(s)

Optimal policies for inventory systems with concave ordering costs. / Benjaafar, Saif; Chen, David; Yu, Yimin.

In: Naval Research Logistics, Vol. 65, No. 4, 2018, p. 291-302.

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