Average-Cost Optimality of a Base-Stock Policy for a Multi-Product Inventory Model with Limited Storage

We consider a stochastic multi-product inventory model with a ware-housing constraint with the objective of minimizing the expected long-run average cost. Using the vanishing discount approach, a dynamic programming equation and the corresponding verification result are established. The structure of optimal policies is analyzed when ordering cost of the commodities is linear and the inventory/backlog cost is convex. The optimal policy is shown to be a base-stock policy, in contrast to a modified base-stock policy optimal in the discounted cost version of the problem

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Year of publication:	2020
Authors:	Beyer, Dirk
Other Persons:	Sethi, Suresh (contributor) ; Sridhar, R. (contributor)
Publisher:	[2020]: [S.l.] : SSRN
Subject:	Lagerhaltungsmodell \| Inventory model \| Lagermanagement \| Warehouse management \| Theorie \| Theory \| Mathematische Optimierung \| Mathematical programming \| Mehrproduktfertigung \| Multiproduct production