A practical inventory control policy using operational statistics

Authors:
Liwan H. Liyanage;J.George Shanthikumar
Affiliations:
School of Quantitative Methods and Mathematical Sciences, University of Western Sydney, Campbelltown Campus, Penrith South DC, NSW 1797, Australia;Department of Industrial Engineering and Operations Research, University of California at Berkeley, Berkeley, CA 94720, USA
Venue:
Operations Research Letters
Year:
2005

Citing 2
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Abstract

Consider the newsvendor inventory control problem with an ambiguous demand. The traditional approach of separating the parameter estimation and the maximization of the expected profit leads to a suboptimal inventory policy. Operational statistics, introduced in this paper, provides a better solution by integrating the estimation and the optimization tasks.