Econometrica: Apr 1966, Volume 34, Issue 2

Decision and Horizon Rules for Stochastic Planning Problems: A Linear Example

https://doi.org/0012-9682(196604)34:2<307:DAHRFS>2.0.CO;2-4
p. 307-330

Abraham Charnes, Jacques Dreze, Merton Miller

Analytic decision rules and horizon rules are developed for the warehousing problem. A stochastic warehousing problem is defined and solved, first by backwards induction, then by means of a forward working algorithm. The influence of holding costs and discount rates on forecasting horizons is illustrated.

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