K-convex functions, first introduced by Scarf, are a special weakening of the concept of convex function which is crucial in the proof of the optimality of the ( s , S ) {\displaystyle (s,S)} policy in inventory control theory. The policy is characterized by two numbers s and S, S ≥ s {\displaystyle S\geq s} , such that when the inventory level falls below level s, an order is issued for a quantity that brings the inventory up to level S, and nothing is ordered otherwise. Gallego and Sethi have generalized the concept of K-convexity to higher dimensional Euclidean spaces.
Definition Two equivalent definitions are as follows:
Definition 1 (The original definition) Let K be a non-negative real number. A function g : R → R {\displaystyle g:\mathbb {R} \rightarrow \mathbb {R} } is K-convex if
g ( u ) + z [ g ( u ) − g ( u − b ) b ] ≤ g ( u + z ) + K {\displaystyle g(u)+z\left[{\frac {g(u)-g(u-b)}{b}}\right]\leq g(u+z)+K}
for any u , z ≥ 0 , {\displaystyle u,z\geq 0,} and b > 0 {\displaystyle b>0} .
Definition 2 (Definition with geometric interpretation) A function g : R → R {\displaystyle g:\mathbb {R} \rightarrow \mathbb {R} } is K-convex if
g ( λ x + λ ¯ y ) ≤ λ g ( x ) + λ ¯ [ g ( y ) + K ] {\displaystyle g(\lambda x+{\bar {\lambda }}y)\leq \lambda g(x)+{\bar {\lambda }}[g(y)+K]}
for all x ≤ y , λ ∈ [ 0 , 1 ] {\displaystyle x\leq y,\lambda \in [0,1]} , where λ ¯ = 1 − λ {\displaystyle {\bar {\lambda }}=1-\lambda } . This definition admits a simple geometric interpretation related to the concept of visibility. Let a ≥ 0 {\displaystyle a\geq 0} . A point ( x , f ( x ) ) {\displaystyle (x,f(x))} is said to be visible from ( y , f ( y ) + a ) {\displaystyle (y,f(y)+a)} if all intermediate points ( λ x + λ ¯ y , f ( λ x + λ ¯ y ) ) , 0 ≤ λ ≤ 1 {\displaystyle (\lambda x+{\bar {\lambda }}y,f(\lambda x+{\bar {\lambda }}y)),0\leq \lambda \leq 1} lie below the line segment joining these two points. Then the geometric characterization of K-convexity can be obtain as:
A function g {\displaystyle g} is K-convex if and only if ( x , g ( x ) ) {\displaystyle (x,g(x))} is visible from ( y , g ( y ) + K ) {\displaystyle (y,g(y)+K)} for all y ≥ x {\displaystyle y\geq x} .
Proof of equivalence It is sufficient to prove that the above definitions can be transformed to each other. This can be seen by using the transformation
λ = z / ( b + z ) , x = u − b , y = u + z . {\displaystyle \lambda =z/(b+z),\quad x=u-b,\quad y=u+z.}
Properties
Property 1 If g : R → R {\displaystyle g:\mathbb {R} \rightarrow \mathbb {R} } is K-convex, then it is L-convex for any L ≥ K {\displaystyle L\geq K} . In particular, if g {\displaystyle g} is convex, then it is also K-convex for any K ≥ 0 {\displaystyle K\geq 0} .
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