US-Turkey Cooperative Research: International: Bayesian Inventory Management under Censored Demand

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0114738LevineDescription: This award is for support of a collaborative research project involving Dr. Richard Levine, Department of Statistics, University of California at Davis, Davis, California, Dr. Emre Berk, Department of Management, and Dr. Ulku Gurler, Department of Industrial Engineering, both at Bilkent University, Ankara, Turkey. These scientists will study the development of Bayesian updating methods to draw statistical inferences and derive optimal solutions in periodic review inventory problems. The goal is to develop realistic Bayesian models for decision-making in inventory management applications when1) inventory demands are unobservable or partially observed (lost sales); 2) customers differ in their attitudes toward immediate and delayed inventories; 3) demand processes evolve over time. In the context of inventory management, the goal is to be achieved by utilizing advanced statistical methods for modeling the uncertainty in demand processes and incorporating Bayesian methods to update available information dynamically during the course of operation as data accumulates. Scope: This award will allow an Assistant Professor at UC Davis to collaborate with two Turkish scientists, one of whom is also a recent Ph.D. This project is likely to enhance the potential for long-term productive collaboration. The topic is of scientific interest. The purpose is to bridge the gap between the purely industrial engineering/operations research approach that focuses on optimization of a given system and the common statistical approach that provides a one time solution for the estimation of system parameters from a given data set. The collaboration brings experts with needed complementary expertise to deal with this complex problem. The project brings active researchers in these areas in the United States and Turkey. The project meets the INT criteria for support of collaborative research of mutual benefit.