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A Periodic-Review Inventory Model With Application To The Continuous-Review Obsolescence Problem, Yuyue Song, Hoong Chuin Lau

Research Collection School Of Computing and Information Systems

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.