Optimal policies in continuous time inventory control models with limited supply

Optimal policies in continuous time inventory control models with limited supply

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Article ID: iaor20042949
Country: United Kingdom
Volume: 46
Issue: 7
Start Page Number: 1139
End Page Number: 1145
Publication Date: Oct 2003
Journal: Computers & Mathematics with Applications
Authors:
Keywords: markov processes, probability, programming: markov decision, yield management
Abstract:

In this paper, we deal with the problem of a fixed number of units of a certain perishable commodity over a continuous time horizon. Airline seats, hotel rooms, advertising space in newspapers, and some seasonal products that must be sold before the end of the season are examples of such commodities that cannot be carried over and are not storable for consumers. This paper considers such a problem of continuous time perishable inventory control by applying semi-Markov decision processes over a finite time horizon. It is shown that there is an optimal policy that is simple and stationary. Furthermore, some analytical properties of this optimal policy and its value function are explored under certain specific assumptions.

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