A continuous-time examination of the last buy problem

Abstract

The last buy problem is a stochastic inventory management problem that occurs at the end of a product's life cycle. When production of a given product ceases, it may become necessary to shut down manufacture of all parts of the product. However, there will likely still be demand for spare parts of the product, due to part failure from the product still in use. To meet this demand, a one-time order of spare parts-a last buy-is made to satisfy the demand for all spare parts going forward. vi