Abstract
In this paper, a new algorithm for computing optimal (s, S) policies is derived based upon a number of new properties of the infinite horizon cost function c(s, S) as well as a new upper bound for optimal order-up-to levels S* and a new lower bound for optimal reorder levels s*. The algorithm is simple and easy to understand. Its computational complexity is only 2.4 times that required to evaluate a (specific) single (s, S) policy. The algorithm applies to both periodic review and continuous review inventory systems.
Keywords
Simple (philosophy)Upper and lower boundsComputer scienceMathematical optimizationFunction (biology)Order (exchange)MathematicsAlgorithmEconomicsFinance
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Publication Info
- Year
- 1991
- Type
- article
- Volume
- 39
- Issue
- 4
- Pages
- 654-665
- Citations
- 320
- Access
- Closed
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Cite This
Yu‐Sheng Zheng,
A. Federgruen
(1991).
Finding Optimal (s, S) Policies Is About As Simple As Evaluating a Single Policy.
Operations Research
, 39
(4)
, 654-665.
https://doi.org/10.1287/opre.39.4.654
Identifiers
- DOI
- 10.1287/opre.39.4.654