Unimodal Property of the Average Cost Function

These notes provide an introduction to and proof of Lemma 2.5.

Lemma 2.5: When M ≥ p ≥ -U and α and Ω are fixed finite values satisfying α < Ω, the average cost of the (s, S) policy (α, Ω) Average Cost of the policy (α, $Omega;) is unimodal in the drift rate u.

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