The Optimality of (<i>s</i>, <i>S</i>) Policies for a Stochastic Inventory Problem with Proportional and Lump-Sum Penalty Cost

In this paper we consider a single product multi-period inventory problem for which the penalty cost consists of two parts, a lump-sum portion which is independent of the size of the shortage and a portion which is linear in the size of the shortage. We show that for all nonincreasing demand density functions, the expected total cost function is K-convex and hence, there is an optimal policy for the n-period problem that is (s, S).

• 저널Management Science · 33(6) · 750–755
• 토픽Supply Chain and Inventory Management · Management Information Systems
• DOI10.1287/mnsc.33.6.750
• 저자Y.P. Aneja, Amir Noori