An optimal policy for nonstationary inventory problems with service level constraint

This paper considers a general inventory control problem with nonstationary stochastic demand and service level constraint. By analyze the inventory relationship between the decision making periods, a new inventory model is established, which regressively estimate the inventory cost from the last replenishment period to the first. Then a solution algorithm is provided, and the optimal solution has the nonstationary (s, S) form. Comparison with existing method illustrates the optimality of the proposed method.