Inventory policies for a partially observed supply capacity model

Qing Yang; Shiji Song; Cheng Wu

doi:10.3934/jimo.2013.9.13

Article Contents

2013, Volume 9, Issue 1: 13-30. Doi: 10.3934/jimo.2013.9.13

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Inventory policies for a partially observed supply capacity model

1.
Department of Automation, Tsinghua University, Beijing 100084

Received: March 31, 2011

Revised: March 31, 2012

Published: December 2012

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Abstract

This paper considers a multi-period inventory problem with partially observed supply capacity in the lost sales case. Partially observed supply means that exact available supply in a period is observed only when the order quantity is not less than the supply capacity. Then, these observations are used to update the supply capacity distribution from one period to the next. For this inventory problem with partially observed supply information and random demand, we establish the inventory model according to a known Markov decision process(MDP) space. The existence of an optimal policy for this inventory problem is proved. Finally, some numerical examples considering Poisson distributed demand are given to verify the ability to find an optimal order quantity.

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Mathematics Subject Classification: Primary: 90B05; Secondary: 90C40.

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