publication . Article . 2014

Deterministic and stochastic optimal inventory control with logistic stock-dependent demand rate

Tsoularis, A;
Open Access English
  • Published: 01 Jan 2014
  • Country: United Kingdom
It has been suggested by many supply chain practitioners that in certain cases inventory can have a stimulating effect on the demand. In mathematical terms this amounts to the demand being a function of the inventory level alone. In this work we propose a logistic growth model for the inventory dependent demand rate and solve first the continuous time deterministic optimal control problem of maximising the present value of the total net profit over an infinite horizon. It is shown that under a strict condition there is a unique optimal stock level which the inventory planner should maintain in order to satisfy demand. The stochastic version of the optimal contro...
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