Finite-stage Markov decision processes in inventory management

Mitkovska-Trendova, Katerina and Minovski, Robert and Jovanoski, Delco (2008) Finite-stage Markov decision processes in inventory management. In: ICEIRD 2008, 08-11 May 2008, Skopje, Ohrid, Macedonia.

6. ICEIRD_2008_sodrzina+trud.pdf

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Markov decision processes are a flexible technique for stochastic and dynamic optimization problems and provide a powerful tool for optimizing their performance. Their applications arise in inventory management, cash-flow management, water resources management, reliability and replacement problems, some routing and logistics problems, health care, highway and bridge maintenance, machine maintenance, forest management, control of queuing systems, operation of communication networks,… etc. They are very pervasive and many companies use them. The increased dynamics of the market is making the problem of valid and fast decision making more and more actual. So is the problem of the determination of the enterprise performance. Ability of the enterprise to continuously adapt to the market changes is inevitable for the enterprise success. The main intention of our model for enterprise restructuring, named as COMPASS is to systematise the complex process of enterprise restructuring and to attach appropriate methods in the key decision making points, supporting the industry praxis with simple and practical methods/tools, which will be understandable and easy to use, such as Markov decision processes model. That is the only way to achieve implementation of the methods and the model as a whole. Here we introduce an application of finite-stage Markov decision processes in an inventory problem. The example is an equivalent to a number of important applications and the idea of the example can be adapted to represent this applications. Besides the mathematical background, one can use the model without knowing the theory, since the calculations and the results for the optimal policy and the value function can be obtained easily using programs in Excel,MATLAB,LINDO/LINGO, CPLEX,…etc.

Item Type: Conference or Workshop Item (Paper)
Subjects: Engineering and Technology > Mechanical engineering
Divisions: Military Academy
Depositing User: Katerina Trendova
Date Deposited: 04 Feb 2015 08:26
Last Modified: 04 Feb 2015 08:26

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