Minimax Solutions of Economic Criterion Models
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Most of the models in inventory theory make the assumption that either the future demand is known precisely, or that it may be described by a definite probability distribution. This was the case with the models discussed in the previous chapters. As a departure, Scarf considered a one-stage inventory model in which only the mean and deviation of the distribution are assumed to be known. Scarf then proved that an optimal inventory policy exists which maximizes the minimum profit per stage, considering all distributions with the given mean and deviation.
KeywordsConvex Function Inventory System Inventory Model Game Model Demand Distribution
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