Optimal Allocation of Limited Inventory Among Multiclass Customers with Finite Populations

New Analytical Insights on Inventory Allocation How should a limited inventory of a single resource be allocated across multiple customer groups with distinct rewards and arrival rates, especially when each group has a finite population? In their paper “Optimal allocation of limited inventory among multiclass customers with finite populations” in Operations Research, the authors develop a stochastic framework and formulate the problem as a Markov decision process. By analyzing the structure of the optimal value function, they reveal a new insight; rather than gradually expanding access to lower-priority groups over time, it is in fact optimal to progressively restrict access to these groups. The paper also introduces a fluid model with an explicit solution, which provides a good approximation when the system size is large. These findings offer both theoretical and practical contributions to inventory allocation problems, with potential applications in healthcare and humanitarian resource management as well as commercial product sales.