Discounted Cost Models with Backorders

  • Dirk BeyerEmail author
  • Feng Cheng
  • Suresh P. Sethi
  • Michael Taksar
Part of the International Series in Operations Research & Management Science book series (ISOR, volume 108)


One of the most important developments in the inventory theory has been to show that (s, S) policies are optimal for a class of dynamic inventory models with random periodic demands and fixed ordering costs. Under an (s, S) policy, if the inventory level at the beginning of a period is less than the reorder point s, then a sufficient quantity must be ordered to achieve an inventory level S, the order-up-to level, upon replenishment. There are a number of papers in the literature devoted to proving the optimality of (s, S) policies under a variety of assumptions. However, in real-life inventory problems, some of these assumptions do not hold. It is our purpose to relax these assumptions toward realism and still demonstrate the optimality of (s, S)-type policies.


Optimal Policy Inventory Model Inventory Level Demand State Type Policy 
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Copyright information

© Springer-Verlag US 2010

Authors and Affiliations

  • Dirk Beyer
    • 1
    Email author
  • Feng Cheng
    • 2
  • Suresh P. Sethi
    • 3
  • Michael Taksar
    • 4
  1. 1.M-FactorSan MateoUSA
  2. 2.Federal Aviation AdministrationOffice of Performance Analysis and StrategyWashingtonUSA
  3. 3.School of Management, M/S SM30The University of Texas at DallasRichardsonUSA
  4. 4.Department of MathematicsUniversity of MissouriColumbiaUSA

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