Book Description
This investigation reformulates an approximately optimal algorithm for computing (s, S) inventory policies. The approximation is for a single-item periodic review model with set-up cost, linear holding and shortage cost, fixed replenishment lead time, and backlogging of unfilled demand. The analysis repeats the numerical analysis process performed to derive the Power Approximation - an approximately optimal (s, S) policy rule. The research reported here is a modification of the previous derivation to correct for both the non-homogeneity of the Power Approximation and the limiting behavior of the approximation for S-s. The operating characteristics of the modification are nearly as close to optimal as those of the original Power Approximation. (Author).
