A probabilistic dynamic programing model for determining optimum inventories
Zhou, Steve Bin
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Wang, J., Zhou, S. B., & Pei, Z. (2020). A probabilistic dynamic programing model for determining optimum inventories. Journal of Management & Engineering Integration, 13(1), 86-95.
The occurrence and size of snowfall, and therefore, the level of demand for salt, are uncertain for each week. Therefore, a probabilistic inventory model is required. This will be a periodic review model - the inventory of salt at the beginning of each week will determine the optimal quantity to be purchased to satisfy expected demand. Dynamic programming with a backward recursion is utilized to determine weekly optimal costs/inventory level.
Published in SOAR: Shocker Open Access Repository by Wichita State University Libraries Technical Services, November 2022.