The rate at which Markov decision processes converge as the horizon length increases can be important for computations and judging the appropriateness of models. The convergence rate is commonly associated with the discount factor \alpha . For example, the total value function for a broad set of...

The effect of stockouts on prediction accuracy is analyzed. The forecasting bias that results and the effect on the prediction error variance are explored and are seen to depend on the frequency of stockouts, the coefficient of variation of demand, and the serial correlation of demand.