Please use this identifier to cite or link to this item:
|Title:||Joint management of finished goods inventory and demand process for a make-to-stock product: A computational approach|
|Keywords:||Demand process management|
Finished goods inventory management
|Citation:||Chen, L., Feng, Y., Ou, J. (2006). Joint management of finished goods inventory and demand process for a make-to-stock product: A computational approach. IEEE Transactions on Automatic Control 51 (2) : 258-273. ScholarBank@NUS Repository. https://doi.org/10.1109/TAC.2005.863484|
|Abstract:||In this paper, we consider the joint management of finished goods inventory and demand for a product in a make-to-stock production system. The production process is random with controllable mean rate, and the demand process is stochastic with changeable mean rate dependent on the sale price being high or low. The management issue is how to dynamically adjust the production rate and the sale price to maximize the long run total discounted profit. We show that: 1) the optimal management of the finished goods inventory follows a base stock policy: when the inventory is above certain base stock level, the production is halted; otherwise the maximum production rate is deployed to raise the inventory to the base stock level; and 2) the optimal management of the demand process follows a price switch threshold policy: when the inventory is above the threshold, the low sale price is chosen to sell the product; and below it the high price is chosen to reduce the demand. We provide an algorithm to compute the base stock level and price switch threshold. Extension to multiple price choices is given with proofs highlighted. © 2006 IEEE.|
|Source Title:||IEEE Transactions on Automatic Control|
|Appears in Collections:||Staff Publications|
Show full item record
Files in This Item:
There are no files associated with this item.
checked on May 18, 2018
WEB OF SCIENCETM
checked on Mar 27, 2018
checked on Apr 21, 2018
Items in DSpace are protected by copyright, with all rights reserved, unless otherwise indicated.