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On the Structure of Lost-Sales Inventory Models

Fuqua School of Business, Duke University, Durham, North Carolina 27708
paul.zipkin{at}duke.edu

We provide a new approach to the structural analysis of the standard lost-sales inventory system. This approach is, we think, easier to work with than the original one. We also derive new bounds on the optimal policy. Then, we show that more variable demand leads to higher cost. Finally, we extend the analysis to several important variations of the basic model.

Subject classifications: inventory; lost sales; discrete convexity.
History: Received May 2006; revision received June 2007; accepted July 2007.

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