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An Optimal Stopping Problem of a Growing Inventory

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  • Eithan Hochman

    (Tel Aviv University)

Abstract

This paper deals with the problem of explaining the behavior of a producer entering the period with growing inventory, while the current price and a stochastic distribution of prices for the following period are given. The conceptual framework is one of searching for an optimal stopping rule for this problem. It is shown that the optimal policy consists of finding a unique cutoff price function, which is non-increasing with respect to the age of the stock.

Suggested Citation

  • Eithan Hochman, 1973. "An Optimal Stopping Problem of a Growing Inventory," Management Science, INFORMS, vol. 19(11), pages 1289-1291, July.
    • Handle: RePEc:inm:ormnsc:v:19:y:1973:i:11:p:1289-1291
    DOI: 10.1287/mnsc.19.11.1289
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    Cited by:

    1. Bouhlel, Imen & Chessa, Michela & Festré, Agnès & Guerci, Eric, 2022. "When to stop searching in a highly uncertain world? A theoretical and experimental investigation of “two-way” sequential search tasks," Journal of Economic Behavior & Organization, Elsevier, vol. 203(C), pages 80-92.
    2. Sinh, L.X. & MacAulay, T. Gordon & Brennan, Donna C., 2003. "A Bio-economic Model of a Shrimp Hatchery in the Mekong River Delta of Vietnam," 2003 Conference (47th), February 12-14, 2003, Fremantle, Australia 58261, Australian Agricultural and Resource Economics Society.
    3. Lawrence, John D. & Kaylen, Michael S., 1990. "Risk Management For Livestock Producers: Hedging And Contract Production," Staff Papers 13496, University of Minnesota, Department of Applied Economics.

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