We develop a general methodology for a partially observed stochastic control problem. The dynamics is governed by a discrete-time Markov process. We describe an application to an inventory system with possibility of shrinkage, and introduce unnormalized conditional probabilities to transform the...

We develop a general filtering framework for the problem of estimating the state of a system whose dynamics is governed by a discrete-time Markov process. We describe applications to inventory control systems with partial observations. We introduce conditional distributions and unnormalized...

The theory of investment and growth of firms has been an important source of stochastic control problems in economics and management science. The issue of optimal management contract under the constraint that a CEO can depart to pursue an outside option ("managerial limited commitment") has been...