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Journal of Applied Mathematics
Volume 2014, Article ID 236083, 9 pages
http://dx.doi.org/10.1155/2014/236083
Research Article

Robust Inventory Financing Model with Partial Information

1School of Economics and Business Administration, Chongqing University, Chongqing 400044, China
2School of Mathematics and Information Engineering, Chongqing University of Education, Chongqing 400067, China

Received 15 January 2014; Revised 30 April 2014; Accepted 19 May 2014; Published 11 June 2014

Academic Editor: Vincent Charles

Copyright © 2014 Yong Wang et al. 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.

Abstract

Given current fast-changing market conditions and difficulty in obtaining financing for small- and medium-sized enterprises, this paper studies the robust inventory financing model under partial information, that is, where the demand distribution is partly known. Two demand information cases are discussed: (1) the mean and variance and (2) the support of the demand distribution. In this setting, the robust method that maximizes the worst-case profit and minimizes the firm’s maximum possible regret of not acting optimally would be used to formulate the optimal sales quantity. We show that the approach used in this paper is tractable, and we provide an explicit expression for the robust optimal policy. We then use numerical examples to compare the firm’s losses under two demand information cases with those occurring under demand certainty. More importantly, the numerical examples indicate that our robust inventory financing model can obtain a robust but not conservative solution.