Article ID: | iaor19992790 |
Country: | Netherlands |
Volume: | 110 |
Issue: | 1 |
Start Page Number: | 20 |
End Page Number: | 41 |
Publication Date: | Oct 1998 |
Journal: | European Journal of Operational Research |
Authors: | Parlar Mahmut, etinkaya S. |
Keywords: | programming: probabilistic |
In this paper, we consider a single product, periodic review, stochastic demand inventory problem where backorders are allowed and penalized via fixed and proportional backorder costs simultaneously. Fixed backorder cost associates a one-shot penalty with stockout situations whereas proportional backorder cost corresponds to a penalty for each demanded but yet waiting to be satisfied item. We discuss the optimality of a myopic base-stock policy for the infinite horizon case. Critical number of the infinite horizon myopic policy, i.e., the base-stock level, is denoted by