Affiliation:
1. Leeds School of Business, University of Colorado Boulder, Boulder, Colorado 80309;
2. Booth School of Business, University of Chicago, Chicago, Illinois 60637
Abstract
Efficient Learning Algorithms for the Best Capped Base-Stock Policy in Lost Sales Inventory Systems Periodic review, lost sales inventory systems with lead times are notoriously challenging to optimize. Recently, the capped base-stock policy, which places orders to bring the inventory position up to the order-up-to level subject to the order cap, has demonstrated exceptional performance. In the paper “UCB-Type Learning Algorithms with Kaplan–Meier Estimator for Lost Sales Inventory Models with Lead Times,” Lyu, Zhang, and Xin propose an upper confidence bound–type learning framework. This framework, which incorporates simulations with the Kaplan–Meier estimator, works with censored demand observations. It can be applied to determine the optimal capped base-stock policy with a tight regret with respect to the planning horizon and the optimal base-stock policy with a regret that matches the best existing result. Both theoretical analysis and extensive numerical experiments demonstrate the effectiveness of the proposed learning framework.
Publisher
Institute for Operations Research and the Management Sciences (INFORMS)