## Awi Federgruen

*An efficient algorithm for computing optimal (**s,S*) policies

Coauthor(s): Paul Zipkin.

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**Abstract:**

This paper presents an algorithm to compute an optimal (*s,S*) policy under standard assumptions (stationary data, well-behaved one-period costs, discrete demand, full backlogging, and the average-cost criterion). The method is iterative, starting with an arbitrary, given (*s,S*) policy and converging to an optimal policy in a finite number of iterations. Any of the available approximations can thus be used as an initial solution. Each iteration requires only modest computations. Also, a lower bound on the true optimal cost can be computed and used in a termination test. Empirical testing suggests very fast convergence.

**Source:** *Operations Research*

**Exact Citation:**

Federgruen, Awi, and Paul Zipkin. "An efficient algorithm for computing optimal (*s,S*) policies." *Operations Research* 32, no. 6 (1984): 1268-1285.

**Volume:** 32

**Number:** 6

**Pages:** 1268-1285

**Date:**
1984