International Journal of Stochastic Analysis

International Journal of Stochastic Analysis / 2002 / Article

Open Access

Volume 15 |Article ID 191064 | 11 pages | https://doi.org/10.1155/S1048953302000205

Filtering and predicting the cost of hidden perished items in an inventory model

Received01 Aug 2001
Revised01 Jun 2002

Abstract

This paper is concerned with a discrete time, discrete state inventory model for items of changing quality. Items are assumed to be in one of a finite number, M, of quality classes that are ordered in such a way that Class 1 contains the best quality and the last class contains the pre-perishable quality. The changes of items' quality are dependent on the state of the ambient environment. Furthermore, at each epoch time, items of different classes may be sold or moved to a lower quality class or stay in the same class. These items are priced according to their quality, and costs are incurred as items lose quality. Based on observing the history of the inventory level and prices, we propose recursive estimators as well as predictors for the joint distribution of the accumulated losses and the state of the environment.

Copyright © 2002 Hindawi Publishing Corporation. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

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