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An optimal ordering policy for situations with uncertainty in supply
Author(s) -
Basu Sujit K.
Publication year - 1987
Publication title -
naval research logistics (nrl)
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.665
H-Index - 68
eISSN - 1520-6750
pISSN - 0894-069X
DOI - 10.1002/1520-6750(198704)34:2<151::aid-nav3220340202>3.0.co;2-g
Subject(s) - minimax , random variable , mathematics , variable (mathematics) , econometrics , profit (economics) , order (exchange) , economic order quantity , sample (material) , economics , mathematical optimization , statistics , microeconomics , supply chain , mathematical analysis , chemistry , finance , chromatography , political science , law
A one‐period inventory model where supply is a random variable with mean proportional to the quantity ordered has been considered. Under new better than used in expectation assumption on the supply variable, a strategy which maximizes a minimum profit has been suggested. An estimate for this maximin order quantity whenever the (customer) demand distribution is unknown has been proposed and almost sure convergence of this estimate to its true value with increasing sample size has been established.