Undiscounted Approximations of Discounted Regenerative Models

This paper approximates the discounted average cost in regenerative models by an undiscounted average cost. A financial holding cost is assessed on expenditures that are incurred earlier than the middle of each cycle. A financial variability cost that depends on the variability of the cycle time is also assessed. Explicit upper and lower bounds on the approximation are obtained in the deterministic case. Application to the EOQ model is made.