On the Optimal Policy Structure in Serial Inventory Systems with Lost Sales

  title={On the Optimal Policy Structure in Serial Inventory Systems with Lost Sales},
  author={Woonghee Tim Huh and Ganesh Janakiraman},
  journal={Operations Research},
We study a periodically reviewed, serial inventory system in which excess demand from external customers is lost. We derive elementary properties of the vector of optimal order quantities in this system. In particular, we derive bounds on the sensitivity (or, more mathematically, the derivative) of the optimal order quantity at each stage to the vector of the current inventory levels. Our analysis uses the concept of L-naturalconvexity, which was studied in discrete convex analysis (Murota… CONTINUE READING
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