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Computationally simple and unified approach to finite- and infinite-horizon Clark–Scarf inventory model

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  • Charu Sinha
  • Matthew Sobel
  • Volodymyr Babich

Abstract

In this article, it is shown that an easily computed and simply structured policy for making work-order decisions is optimal in the Clark–Scarf inventory model. That is a model of a make-to-stock multistage serial manufacturing process with convex costs of finished goods inventory, a setup cost for purchasing, linear costs of work-in-process inventories, and backlogging of excess demand. The criteria used in this article include the expected present value of costs (in the finite and infinite horizons) and the long-run average cost per period. Moreover, the same myopic policy that is optimal for the finite-horizon model is optimal also for the infinite-horizon model. This permits a unified approach to the various criteria.

Suggested Citation

  • Charu Sinha & Matthew Sobel & Volodymyr Babich, 2011. "Computationally simple and unified approach to finite- and infinite-horizon Clark–Scarf inventory model," IISE Transactions, Taylor & Francis Journals, vol. 43(3), pages 207-219.
    • Handle: RePEc:taf:uiiexx:v:43:y:2011:i:3:p:207-219
    DOI: 10.1080/0740817X.2010.523766
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    Cited by:

    1. Jie Ning & Matthew J. Sobel, 2019. "Easy Affine Markov Decision Processes," Operations Research, INFORMS, vol. 67(6), pages 1719-1737, November.
    2. Matthew J. Sobel & Volodymyr Babich, 2012. "Optimality of Myopic Policies for Dynamic Lot-Sizing Problems in Serial Production Lines with Random Yields and Autoregressive Demand," Operations Research, INFORMS, vol. 60(6), pages 1520-1536, December.

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