R, Q, Inventory Problem with Unknown Mean Demand and Learning (A Sequel)
Abstract
Report concerning management of new items for which only a Bayesian prior distribution on the mean is available. As demand occurs, the prior is updated and reorder point and reorder quantity are revised. In an earlier paper, a heuristic solution to finding an optimum reorder point was presented. This report introduces an alternative cost structure, discounted cash flow, and adapts the heuristic approach to this cost structure. It reports on the results of simulation using real world demand data, which proved favorable to this approach. It discusses a modification to current approaches for determining cost of backorder. This report was motivated by concern with management of low failure items. For such items the discounted cash flow structure is most appropriate.
Document Details
- Document Type
- Technical Report
- Publication Date
- Sep 01, 1977
- Accession Number
- ADA045210
Entities
People
- Alan J. Kaplan