In this paper we consider a stochastic-demand periodic-review inventory model with sudden obsolescence. We characterize the structure of the optimal policy and propose a dynamic programming algorithm for computing its parameters. We then utilize this algorithm to approximate the solution to the continuous-review sudden obsolescence problem with general obsolescence distribution. We prove convergence of our approximation scheme, and demonstrate it numerically against known closed-form solutions of special cases.
Inventory model, Sudden obsolescence, Continuous-review, Periodic-review
Artificial Intelligence and Robotics | Operations Research, Systems Engineering and Industrial Engineering
Intelligent Systems and Decision Analytics
European Journal of Operations Research
SONG, Yuyue and LAU, Hoong Chuin.
A periodic-review inventory model with application to the continuous-review obsolescence problem. (2004). European Journal of Operations Research. 159, (1), 110-120. Research Collection School Of Information Systems.
Available at: http://ink.library.smu.edu.sg/sis_research/64
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