An Inventory Model with Limited Production Capacity and Uncertain Demands II. The Discounted-Cost Criterion

  title={An Inventory Model with Limited Production Capacity and Uncertain Demands II. The Discounted-Cost Criterion},
  author={Awi Federgruen and Paul H. Zipkin},
  journal={Math. Oper. Res.},
This paper considers a single-item, periodic-review inventory model with uncertain demands. We assume a finite production capacity in each period. With stationary data, a convex one-period cost function and a continuous demand distribution, we show under a few additional unrestrictive assumptions that a modified basic-stock policy is optimal under the discounted cost criterion, both for finite and infinite planning horizons. In addition we characterize the optimal base-stock levels in several… 

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