Sequential stochastic assignment problems now comprise a significant literature that includes such important economical applications as the classical asset-selling problem and labor-market analysis (job search). In this type of problems there is a stream of bidders to whom several identical units at the disposal of the decision maker have to be sold. In this paper we incorporate holding costs to be incurred on the units (say assets) at hand into the classical model. Optimal strategies are defined as selling decision-rules which maximize the total expected net reward from the units. We take advantage of the specific structure offered by the framework of sequential stochastic assignment to get explicit results for the optimal strategies. It is further shown how to implement these results for important specific bid distributions.
Bibliographical noteFunding Information:
This work has been partially supported by the Israeli Ministry of Science and by the Paul Ivanier Center for Robotics and Production Management at Ben-Gurion University of the Negev, Beer-Sheva, Israel.
- Dynamic programming
- Exact results
- Inventory modeling
- Sequential stochastic assignment
- Threshold policies