Publications [#330136] of Alessandro Arlotto

Papers Published

1. Arlotto, A; Steele, JM, A Central Limit Theorem for Costs in Bulinskaya’s Inventory Management Problem When Deliveries Face Delays, Methodology and Computing in Applied Probability, vol. 20 no. 3 (September, 2018), pp. 839-854 [doi]
   (last updated on 2026/02/08)

   Abstract:
   It is common in inventory theory to consider policies that minimize the expected cost of ordering and holding goods or materials. Nevertheless, the realized cost is a random variable, and, as the Saint Petersburg Paradox reminds us, the expected value does not always capture the full economic reality of a decision problem. Here we take the classic inventory model of Bulinskaya (Theory of Probability & Its Applications, 9, 3, 389–403, 1964), and, by proving an appropriate central limit theorem, we show in a reasonably rich (and practical) sense that the mean-optimal policies are economically appropriate. The motivation and the tools are applicable to a large class of Markov decision problems.