IDEAS home Printed from https://ideas.repec.org/a/inm/ormnsc/v24y1978i11p1138-1149.html
   My bibliography  Save this article

A Minimax Ordering Policy for the Infinite Stage Dynamic Inventory Problem

Author

Listed:
  • R. Jagannathan

    (University of Iowa)

Abstract

This paper obtains closed form expressions for minimax ordering decisions in a dynamic inventory problem in which demands in successive periods are independent random variables that have known (finite) mean and variance, but whose distributions are otherwise arbitrary and may change from period to period. We assume zero setup cost, linear holding and backlogging costs, and immediate delivery of orders. The situation of a decision maker facing this unknown sequence of demand distributions can be viewed as a sequential zero-sum game against nature. A minimax ordering policy is one that minimizes the maximum expected discounted cost over the planning horizon, where the maximum is taken over all the probability distributions in the class described. A limiting base stock policy characterizes a minimax ordering policy for the infinite-stage model. We show that the limiting base stock policy is an optimal stationary policy for a finite horizon model if the terminal value function - cx is used. We also obtain conditions under which a myopic minimax ordering policy exists for an inventory model when the class of demand distributions is allowed to be nonstationary.

Suggested Citation

  • R. Jagannathan, 1978. "A Minimax Ordering Policy for the Infinite Stage Dynamic Inventory Problem," Management Science, INFORMS, vol. 24(11), pages 1138-1149, July.
  • Handle: RePEc:inm:ormnsc:v:24:y:1978:i:11:p:1138-1149
    DOI: 10.1287/mnsc.24.11.1138
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/mnsc.24.11.1138
    Download Restriction: no

    File URL: https://libkey.io/10.1287/mnsc.24.11.1138?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Xin, Linwei & Goldberg, David A., 2021. "Time (in)consistency of multistage distributionally robust inventory models with moment constraints," European Journal of Operational Research, Elsevier, vol. 289(3), pages 1127-1141.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:24:y:1978:i:11:p:1138-1149. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.