Finding optimal policies in the (S - 1, S ) lost sales inventory model with multiple demand classes

Abstract

This paper examines the algorithms proposed in the literature forfinding good critical level policies in the (S-1,S) lost salesinventory model with multiple demand classes. Our main result isthat we establish guaranteed optimality for two of thesealgorithms. This result is extended to different resupplyassumptions, such as a single server queue. As a corollary, weprovide an alternative proof of the optimality of critical levelpolicies among the class of all policies.inventory;customer differentiation;multiple demand classes;rationing lost sales;stochastic dynamic programming