OPTIMALITY OF GENERALIZED (S, S) POLICIES

A standard inventory model is examined with a concave increasing ordering cost function rather than simply a linear one with a setup cost. A generalized policy is shown to be optimal in the n- period problem. A generalization of K- convex and quasi- convex functions to quasi- K- convex functions is required in the process. The probability densities of demand must be one- sided Polya densities.