Stochastic Multiproduct Inventory Models with Limited Storage

Abstract:  This paper studies multiproduct inventory models with stochastic demands and a warehousing constraint. Finite horizon as well as stationary and nonstationary discounted-cost infinite-horizon problems are addressed. Existence of optimal feedback policies is established under fairly general assumptions.  Furthermore, the structure of optimal policies is analyzed when ordering cost is linear and inventory/backlog cost is convex. The optimal policies generalize the base-stock policies in the single-product case.  Finally, in the stationary infinite-horizon case, a myopic policy is proved to be if the product demands are independent and cost functions are separable.