Inventory Control

Deep Reinforcement Learning (DRL) provides a general-purpose methodology for training inventory policies that can leverage big data and compute. However, off-the-shelf implementations of DRL have seen mixed success, often plagued by high sensitivity to the hyperparameters used during training. In this paper, we show that by imposing policy regularizations, grounded in classical inventory concepts such as "Base Stock", we can significantly accelerate hyperparameter tuning and improve the final performance of several DRL methods. We report details from a 100% deployment of DRL with policy regularizations on Alibaba's e-commerce platform, Tmall. We also include extensive synthetic experiments, which show that policy regularizations reshape the narrative on what is the best DRL method for inventory management.

This study develops a digitalized forecasting-inventory optimization pipeline integrating traditional forecasting models, machine learning regressors, and deep sequence models within a unified inventory simulation framework. Using the M5 Walmart dataset, we evaluate seven forecasting approaches and assess their operational impact under single- and two-echelon newsvendor systems. Results indicate that Temporal CNN and LSTM models significantly reduce inventory costs and improve fill rates compared to statistical baselines. Sensitivity and multi-echelon analyses demonstrate robustness and scalability, offering a data-driven decision-support tool for modern supply chains.

Platelets expire within five days. Blood banks face uncertain daily demand and must balance ordering decisions between costly wastage from overstocking and life-threatening shortages from understocking. Reinforcement learning (RL) can learn effective ordering policies for this Markov decision process (MDP), but the resulting neural policies remain black boxes, hindering trust and adoption in safety-critical domains. We apply COOL-MC, a tool that combines RL with probabilistic model checking and explainable RL, to verify and explain a trained policy for the MDP on platelet inventory management inspired by Haijema et al. By constructing a policy-induced discrete-time Markov chain (which includes only the reachable states under the trained policy to reduce memory usage), we verify PCTL properties and provide feature-level explanations. Results show that the trained policy achieves a 2.9% stockout probability and a 1.1% inventory-full (potential wastage) probability within a 200-step horizon, primarily attends to the age distribution of inventory rather than other features such as day of week or pending orders. Action reachability analysis reveals that the policy employs a diverse replenishment strategy, with most order quantities reached quickly, while several are never selected. Counterfactual analysis shows that replacing medium-large orders with smaller ones leaves both safety probabilities nearly unchanged, indicating that these orders are placed in well-buffered inventory states. This first formal verification and explanation of an RL platelet inventory management policy demonstrates COOL-MC's value for transparent, auditable decision-making in safety-critical healthcare supply chain domains.

We study the offline data-driven newsvendor problem when historical demand is censored by past inventory levels. We introduce a class of policies for which worst-case expected regret over all bounded demand distributions admits an exact finite-dimensional characterization, valid for any sample size and historical inventory design. The dimension depends on the number of distinct inventory levels, rather than the number of observations. This framework yields exact analyses of the sales-as-demand heuristic, the Kaplan-Meier policy, and recent policies from the censored-newsvendor literature. We leverage this reduction to derive sharp insights on the achievable performance of standard inventory policies under demand censoring. In particular, our analysis of the Kaplan-Meier policy shows that while demand censoring fundamentally limits what can be learned from passive sales data, just a small amount of targeted exploration at high inventory levels can substantially improve worst-case guarantees. Finally, we further leverage our reduction to design new policies that push the frontier and substantially improve upon the worst-case regret of known policies, reducing it by up to 40%.