Title: Hidden Markov models for inventory systems with deteriorating items

Authors: Allen H. Tai

Addresses: Department of Applied Mathematics, The Hong Kong Polytechnic University, Hung Hom, Hong Kong

Abstract: In this paper, we propose to apply hidden Markov model (HMM) in modelling an inventory system for deteriorating items. Each item in the inventory has certain chance to deteriorate in a fixed period of time. We propose models for both cases of deterministic and stochastic demands. With the information provided by customers, the inventory levels in the system, which are unknown, can be estimated. Numerical examples are provided to demonstrate the effectiveness of the proposed models.

Keywords: hidden Markov model; HMM; inventory modelling; deteriorating items; inventory levels.

DOI: 10.1504/IJMOR.2015.068289

International Journal of Mathematics in Operational Research, 2015 Vol.7 No.2, pp.138 - 155

Available online: 24 Feb 2015 *

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