End-of-life inventory management problem: Results and insights

We consider a manufacturer who manages the end-of-life phase and takes one of three actions at each period: (1) place an order, (2) use existing inventory, (3) stop holding inventory outside/alternative source. Two examples this source are discounts for new generation product delegating operations. Demand is described by non-homogeneous Poisson process, decision to stopping time. After formulating problem as optimal with additional decisions presenting its dynamic programming algorithm, we martingale theory facilitate calculation value function. Moreover, show analytical results understand difficulties solved, well structural on times. Furthermore, devise expandable taxonomy categorize models in literature. Analytical insights from extensive numerical analysis our approach. The indicate that loss can be high case does not exploit flexibility placing orders or outside Several managerial obtained through decision-making during horizon.