| Article ID: | iaor2006818 |
| Country: | Netherlands |
| Volume: | 33 |
| Issue: | 4 |
| Start Page Number: | 349 |
| End Page Number: | 362 |
| Publication Date: | Jul 2005 |
| Journal: | Operations Research Letters |
| Authors: | Gallego Guillermo, zer zalp |
| Keywords: | programming: dynamic |
We present a new dynamic programming formulation for the stochastic multi-stage serial inventory system based on the cost of sub-system with fewer stages. A heuristic based on judiciously selected common downstream holding cost requires solving one newsvendor problem per stage. A closed-form approximate upper bound allows for accurate sensitivity analysis.