| Author: | Flynn, J. Garstka, S. |
| Title: | A dynamic inventory model with periodic auditing. |
| Journal: | Operations Research
1990 : NOV-DEC, VOL. 38:6, p. 1089-1103 |
| Index terms: | INVENTORY CONTROL AUDITING |
| Language: | eng |
| Abstract: | A single item, periodic review, stationary inventory model with stochastic demands, proportional ordering costs, and convex holding and shortage costs is considered. Shortages are backordered and Veinott's well known terminal conditions holds. Orders can be scheduled for any period, but the actual inventory level is determined every T periods through an audit. This leads to dynamic programming model where stage n contains periods /n-1/T+1 through nT. For both discounted and averaging criteria, a simple rule optimally describes the orders for the T periods of a stage as a function of the state and the cumulative T-period order. Methods are presented for computing optimal policies, together with bounds on the costs of myopic policies. |
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