Journal of Applied Mathematics and Stochastic Analysis 
Volume 2008 (2008), Article ID 158193, 9 pages
doi:10.1155/2008/158193
Research Article

On the Optimality of (s,S) Inventory Policies: A Quasivariational Approach

Lakdere Benkherouf

 Department of Statistics and Operations Research, College of Science, Kuwait University, P.O. Box 5969, Safat 13060, Kuwait
Received 22 February 2008; Revised 9 June 2008; Accepted 17 July 2008

Recommended by Ho Lee

Abstract

This paper revisits the classical discrete-time stationary inventory model. A new proof, based on the theory of quasivariational inequality (QVI), of the optimality of (s,S) policy is presented. This proof reveals a number of interesting properties of the optimal cost function. Further, the proof could be used as a tutorial for applications of QVI to inventory control.