An inventory model is developed for a finite horizon and price changes. The structure and form of the optimal policy is determined along with sensitivity analysis with respect to the length of the horizon. This is a prelude to considering an infinite horizon problem in which at some a priori known time the purchase price of the item will increase. In this paper appropriate ordering policies are determined with respect to known information about an ensuing price rise.
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Lev et al. (1979) studied this question.
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