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ABSTRACT: We discuss a single-period inventory system with a general S-shaped utility function and exponential demand. It is shown that
there exists a state-dependent order-up-to policy to be optimal. Behaviors of optimal policy are illustrated by a numerical
example.
KeywordsInventory-S-shaped utility function-order-up-to policy
Journal of Systems Science and Systems Engineering 04/2012; 19(2):227-236. · 0.43 Impact Factor
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ABSTRACT: The bounded rationality of human behaviors in decision making can be characterized by an S-shaped utility function. We discuss a newsvendor problem with an S-shaped utility. It is shown that the expected utility of the final wealth is unimodal, based on which an optimal policy can be obtained. The impact of initial wealth is investigated and some structural properties of the optimal policy are given. Numerical examples illustrate the results.
Industrial Engineering and Engineering Management, 2009. IEEM 2009. IEEE International Conference on; 01/2010
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ABSTRACT: We consider a single-distributor multi-retailer inventory system in six operating scenarios for a finite horizon. Five scenarios are in decentralized control and the other one is in centralized control. Approximate dynamic programming (ADP) procedures are developed to obtain system performances for scenarios in decentralized control, and a stochastic dynamic programming approach is applied to the scenario in centralized control. The efficiency and effectiveness of ADP procedures are demonstrated by numerical results. Taking the system performance in centralized control as a benchmark, system performances in decentralized control are investigated and compared for different operating scenarios. The results provide useful insights in system planning and operations.
International Journal of Production Economics.
