Economic consequences of a production and inventory control policy
2004 (English)In: International Journal of Production Research, ISSN 0020-7543, E-ISSN 1366-588X, Vol. 42, no 17, 3419-3431 p.Article in journal (Refereed) Published
The economic performance of a generalized Order-Up-To policy is investigated in response to an Auto Regressive stochastic demand process. Focus is on the case where the physical production/distribution lead time is one period and where demand is forecasted with simple exponential smoothing. Two sets of convex piece-wise linear costs are considered. The first set is the traditional inventory holding and backlog costs. The second set of costs is piece-wise linear and increasing convex costs associated with the production order rate within and above a capacity constraint. Numerical investigations reveal that the classical Order-Up-To policy is no longer optimal when a broader range of costs is considered in the objective function.
Place, publisher, year, edition, pages
2004. Vol. 42, no 17, 3419-3431 p.
Engineering and Technology
IdentifiersURN: urn:nbn:se:liu:diva-46197DOI: 10.1080/00207540410001727640OAI: oai:DiVA.org:liu-46197DiVA: diva2:267093