Optimal and near-optimal \((s,S)\) inventory policies for Levy demand processes (Q2765598)

The authors study a single-item inventory system with constant lead times and backordering of unfilled demand. They determine cost optimal order quantity/reorder point policies in case the demand process is a Levy jump process. The construction is complicated by the fact, that in this case the inventory position can not be assumed to be uniformly distributed and the overshot of the reorder point has to be taken into account. They develop a quadratrically convergent algorithm for finding optimal policies and a simpler heuristic policy, that is not far from being optimal. In a simulation study based on a Gamma-distributed Levy process the performances of several policies are compared. NEWLINENEWLINENEWLINEHowever, most proofs are to be found in a technical report available from the School of Operations Research and Industrial Engineering, Cornell University, Ithaca, New York, 14853.