A Revision of the Power Approximation for Computing (s,S) Policies
Richard Ehrhardt, Charles Mosier
Management Science · 1984 · Volume 30 · Issue 5
Abstract
A revision of the Power Approximation for computing ( s , S ) inventory policies is presented. The revision incorporates modifications which (1) ensure homgeneity in the units chosen to measure demand and (2) ensure the proper limiting behavior of S − s when the variance of demand is extremely small. Computational experience shows that the revision has operating characteristics that are typically within a few percent of optimal, which is nearly as accurate as the original Power Approximation.
Keywords
inventory/production: approximations, inventory/production: periodic review models
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