Production planning, activity periods and passivity periods
2015 (English)Report (Other academic)
Consider a company which produces and sells a certain product on a market with highly variable demand. Since the demand is very high during some periods, the company will produce and create a stock in advance before these periods. On the other hand it costs money to hold a big stock, so that some balance is needed for optimum. The demand is assumed to be known in advance with sufficient accuracy. We use a technique from optimal control theory for the analysis, which leads to so-called activity periods. During such a period the stock is positive and the production is maximal, provided that the problem starts with zero stock, which is the usual case. Over a period of one or more years, there will be a few activity periods. Outside these periods the stock is zero and the policy is to choose production = the smaller of [demand, maximal production]. The “intrinsic time length” is a central concept. It is simply the maximal time a unit of the product can be stored before selling without creating a loss.
Place, publisher, year, edition, pages
Linköping: Linköping University Electronic Press, 2015. , 34 p.
Linköping Studies in Economics, ISSN 1652-8166 ; 2015:3
IdentifiersURN: urn:nbn:se:liu:diva-123048OAI: oai:DiVA.org:liu-123048DiVA: diva2:876334