This repository provides a Python script that includes the Hierarchical Markov Decision Process (HMDP) and the Proximal Policy Optimization (PPO) algorithm. The goal of this model is to identify a profit maximizing ordering and allocation strategy for a dealer operating both online and offline channels. The dealer also experiences returns, which are assumed to be resellable.
The implementation is based on the outlined model from the paper: J. Goedhart, R. Haijema, and R. Akkerman. Modelling the influence of returns for an omni-channel retailer. European Journal of Operational Research, 306(3):1248–1263, 2023a. doi: 10.1016/j.ejor.2022.08.021.