A CONTINUOUS REVIEW MODEL WITH GENERAL SHELF AGE AND DELAY-DEPENDENT INVENTORY COSTS. Issue 4 (9th October 2015)

• Record Type: Journal Article
• Authors: Federgruen, Awi; Wang, Min
• Is Part Of: Probability in the engineering and informational sciences. Volume 29:Issue 4(2015)
• Page Start: 507
• Page End: 525
• Publication Date: 2015-10-09
• Subjects: Probabilities -- Periodicals; Engineering -- Statistical methods -- Periodicals; Information science -- Statistical methods -- Periodicals; 519.202462
• DOI: 10.1017/S0269964815000169
• Languages: English
• ISSNs: 0269-9648

Abstract

<abstract abstract-type="normal"> <title> <x content-type="archive" xml:space="preserve">Abstract</x> </title> <p>We analyze a continuous review inventory model with the marginal carrying cost of a unit of inventory given by an increasing function of its shelf age and the marginal delay cost of a backlogged demand unit by an increasing function of its delay duration. We show that, under a minor restriction, an (<italic>r, q</italic>)-policy is optimal when the demand process is a renewal process, and a state dependent (<italic>r, q</italic>)-policy is optimal when the demand is a Markov-modulated renewal process. We also derive various monotonicity properties for the optimal policy parameters <italic>r</italic>* and <italic>r</italic>* + <italic>q</italic>*.</p> </abstract>