Asymptotic Optimality of Order-Up-To Policies in Lost Sales Inventory Systems

Electronic Companion — “ Asymptotic Optimality of Order - Up - To Policies in Lost Sales Inventory Systems ” by Woonghee

Asymptotic Optimality of Order-Up-To Policies in Lost Sales Inventory Systems

We study a single-product single-location inventory system under periodic review, where excess demand is lost and the replenishment lead time is positive. The performance measure of interest is the long run average holding cost and lost sales penalty. For a large class of demand distributions, we show that when the lost sales penalty becomes large compared to the holding cost, the relative diff...

Asymptotic Optimality of Order-Up-To Replenishment Policies for Serial Inventory Systems with Lost Sales

We study the optimal policy for a serial inventory system under periodic review when excess demand at the retailer (i.e., the most downstream stage) is lost. We focus on “high service level environments” (i.e., systems where the cost of a lost sale is high compared to inventory holding costs). These environments are typical of products whose margins are high relative to their holding costs. Whe...

Asymptotic Optimality of Constant-Order Policies for Lost Sales Inventory Models with Large Lead Times

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Robustness of Order-Up-to Policies in Lost-Sales Inventory Systems

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