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A dynamic‐programming approach to continuous‐review obsolescent inventory problems

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  • Israel David
  • Eitan Greenshtein
  • Avraham Mehrez

Abstract

Inventory models of modern production and service operations should take into consideration possible exogenous failures or the abrupt decline of demand resulting from obsolescence. This article analyzes continuous‐review versions of the classical obsolescence problem in inventory theory. We assume a deterministic demand model and general continuous random times to obsolescence (“failure”). Using continuous dynamic programming, we investigate structural properties of the problem and propose explicit and workable solution techniques. These techniques apply to two fairly wide (and sometimes overlapping) classes of failure distributions: those which are increasing in failure rate and those which have finite support. Consequently, several specific failure processes in continuous time are given exact solutions. © 1997 John Wiley & Sons, Inc. Naval Research Logistics 44: 757–774, 1997

Suggested Citation

  • Israel David & Eitan Greenshtein & Avraham Mehrez, 1997. "A dynamic‐programming approach to continuous‐review obsolescent inventory problems," Naval Research Logistics (NRL), John Wiley & Sons, vol. 44(8), pages 757-774, December.
    • Handle: RePEc:wly:navres:v:44:y:1997:i:8:p:757-774
    DOI: 10.1002/(SICI)1520-6750(199712)44:83.0.CO;2-9
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    References listed on IDEAS

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    Cited by:

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    2. Krikke, H.R. & van der Laan, E., 2009. "Last Time Buy and Control Policies With Phase-Out Returns : A Case Study in Plant Control Systems," Other publications TiSEM c1a3c438-6d31-4147-afd7-8, Tilburg University, School of Economics and Management.
    3. Markus Emsermann & Burton Simon, 2007. "Optimal Control of an Inventory with Simultaneous Obsolescence," Interfaces, INFORMS, vol. 37(5), pages 445-454, October.

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