2023/10/24 by Dean P. Foster, Foster, Dean, Randy Jia +3
Business, Management and Accounting · Decision Sciences · #Advanced Queuing Theory Analysis #Auction Theory and Applications #FOS: Computer and information sciences #Machine Learning (cs.LG) #Machine Learning (stat.ML) #Supply Chain and Inventory Management
paper · pdf · doi:10.48550/arxiv.2310.16096
openalex publication_date 2023/10/24 · openalex created_date 2025/10/10 · openalex updated_date 2026/07/28
Solutions to address the periodic review inventory control problem with nonstationary random demand, lost sales, and stochastic vendor lead times typically involve making strong assumptions on the dynamics for either approximation or simulation, and applying methods such as optimization, dynamic programming, or reinforcement learning. Therefore, it is important to analyze and evaluate any inventory control policy, in particular to see if there is room for improvement. We introduce the concept of an equilibrium policy, a desirable property of a policy that intuitively means that, in hindsight, changing only a small fraction of actions does not result in materially more reward. We provide a light-weight contextual bandit-based algorithm to evaluate and occasionally tweak policies, and show that this method achieves favorable guarantees, both theoretically and in empirical studies.