Stationary Distribution and Perturbation Bounds for a Stochastic Inventory Model

Abstract

In this paper, we use the theory of generalized inverses to compute the stationary distribution of the (s, S) inventory model directly from the transition matrix of the underlying Markov chain and to provide perturbation bounds. Indeed, approximations are employed to build a tractable model, and statistical methods are used to estimate the unknown parameters and distributions. Hence, the system is subject to perturbations that may cause deviation in the characteristics. The proposed perturbation bound provides a means to estimate the impact of the perturbations on the performance measures of the considered inventory system.