A dynamic-programming approach to continuous-review obsolescent inventory problems

Israel David, Eitan Greenshtein, Avraham Mehrez

Research output: Contribution to journalArticlepeer-review

12 Scopus citations

Abstract

Inventory models of modern production and service operations should take into consideration possible exogenous failures or the abrupt decline of demand resulting from obsolescence. This article analyzes continuous-review versions of the classical obsolescence problem in inventory theory. We assume a deterministic demand model and general continuous random times to obsolescence ("failure"). Using continuous dynamic programming, we investigate structural properties of the problem and propose explicit and workable solution techniques. These techniques apply to two fairly wide (and sometimes overlapping) classes of failure distributions: those which are increasing in failure rate and those which have finite support. Consequently, several specific failure processes in continuous time are given exact solutions.

Original languageEnglish
Pages (from-to)757-774
Number of pages18
JournalNaval Research Logistics
Volume44
Issue number8
DOIs
StatePublished - 1 Jan 1997

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