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                                                     Seminar

             Department of Systems Engineering and Engineering Management
                                  The Chinese University of Hong Kong

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Title	:	Inventory Control with Unobservable Lost Sales and Bayesian Updates
Speaker	:	Prof. Kaijie Zhu
		Department of Industrial Engineering and Logistics Management
		HKUST
Date	:	November 30th, 2007 (Friday)
Time	:	2:00 p.m. - 3:00 p.m.
Venue	:	Room 513
		William M.W. Mong Engineering Building
		(Engineering Building Complex Phase 2)
		CUHK

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Abstract:
　

We study a finite-horizon lost-sales inventory model. The demand
distribution is unknown, and is dynamically updated based on the previous
sales data in a Bayesian fashion. While the literature on inventory problems
with censored demand data has mostly focused on multi-period newsvendor
models, in which the leftovers at each period must be salvaged, the focus
here is systems in which inventory can be carried over to fulfill future
demand. We derive a sample-path expression of the first derivative of the
optimality equation to characterize the key tradeoff of the problem and
compare it with the multi-period newsvendor models. Unlike in the latter,
the myopic solution here is no longer a lower bound on the optimal inventory
level. Based on this expression, we develop tractable bounds on the optimal
inventory level and employ them to devise heuristic policies. Finally, to
assess the effectiveness of these heuristic policies, we develop upper
bounds on their value loss relative to the optimal cost. Numerical examples
are presented to illustrate the results.

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Biography:
　

Kaijie Zhu received his PhD degree in Management Science and Engineering
from Stanford University in 2002, and his master\'s and bachelor\'s degrees in
Automatic Control from Shanghai Jiao Tong University in 1996 and 1993,
respectively. He joined the Department of Industrial Engineering and
Logistics Management at HKUST as an assistant professor in 2002, prior to
which he worked as a pre-professional intern at T. J. Watson Research Center
of IBM in summer 2000. His research interests lie in inventory control,
logistics, and supply chain management. He has published papers in such
journals as Operations Research, Management Science, Manufacturing & Service
Operations Management, and Naval Research Logistics.

************************* ALL ARE WELCOME ************************

Host	:	Prof. Sean X. Zhou
Tel	:	(852) 2609 8336
Email	:	zhoux@se.cuhk.edu.hk
Enquiries	:	Prof. Nan Chen or Prof. Sean X. Zhou
	:	Department of Systems Engineering and Engineering Management
		CUHK
Website	:	http://www.se.cuhk.edu.hk/~seg5810
Email	:	seg5810@se.cuhk.edu.hk

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