Computationally Simple and Unified Approach to Finite and In finite Horizon Clark-Scarf Inventory Model

We show that an easily computed and simply structured policy for making workorder decisions is optimal in the Clark-Scarf inventory model. That is a model of a make-to-stock multistage serial manufacturing process with convex costs of finished goods inventory, a set-up cost for purchasing, linear costs of work-in-process inventories, and backlogging of excess demand. The criteria here include the expected present value of costs (in finite and infinite horizons) and long-run average cost per period. Moreover, the same myopic policy that is optimal for the finite horizon model is optimal also for the infinite horizon model. This permits a unified approach to the various criteria