IDEAS home Printed from https://ideas.repec.org/a/inm/oropre/v71y2023i6p2390-2396.html
   My bibliography  Save this article

Technical Note—Average Cost Optimality in Partially Observable Lost-Sales Inventory Systems

Author

Listed:
  • Xingyu Bai

    (Industrial Enterprise and Systems Engineering, University of Illinois at Urbana–Champaign, Urbana, Illinois 61801)

  • Xin Chen

    (Industrial Enterprise and Systems Engineering, University of Illinois at Urbana–Champaign, Urbana, Illinois 61801)

  • Alexander L. Stolyar

    (Industrial Enterprise and Systems Engineering, University of Illinois at Urbana–Champaign, Urbana, Illinois 61801; Coordinated Science Laboratory, University of Illinois at Urbana–Champaign, Urbana, Illinois 61801)

Abstract

We consider a partially observable lost-sales inventory system, in which the inventory level is observed only when it reaches zero. We use the vanishing discount factor approach to prove the existence of a stationary optimal policy for the average cost minimization. As our main methodological contribution, we provide a way to verify the key condition of the vanishing discount factor approach—the uniform boundedness of the relative discounted value function. To accomplish that, we construct a valid policy, which, in a certain sense, “copies” the actions of another policy for the process with a different initial state. To the best of our knowledge, this paper is the first one on partially observable inventory models under the average cost criterion.

Suggested Citation

  • Xingyu Bai & Xin Chen & Alexander L. Stolyar, 2023. "Technical Note—Average Cost Optimality in Partially Observable Lost-Sales Inventory Systems," Operations Research, INFORMS, vol. 71(6), pages 2390-2396, November.
    • Handle: RePEc:inm:oropre:v:71:y:2023:i:6:p:2390-2396
    DOI: 10.1287/opre.2022.2305
    as

    Download full text from publisher

    File URL: http://dx.doi.org/10.1287/opre.2022.2305
    Download Restriction: no
    File URL: https://libkey.io/10.1287/opre.2022.2305?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
    ---><---

    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:oropre:v:71:y:2023:i:6:p:2390-2396. 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.