Two-critical-number control policy for a stochastic production inventory system with partial backlogging. Issue 14 (18th July 2017)

• Record Type: Journal Article
• Authors: Lin, Hsien-Jen
• Is Part Of: International journal of production research. Volume 55:Issue 14(2017)
• Page Start: 4123
• Page End: 4135
• Publication Date: 2017-07-18
• Subjects: production/inventory model -- Brownian motion -- variable production rate -- total expected cost -- partial backlogging; Factory management -- Periodicals; 658.57
• DOI: 10.1080/00207543.2016.1254353
• Languages: English
• ISSNs: 0020-7543

Abstract

Abstract : This paper deals with a production–inventory control model with partial backlogging, in which a reflected Brownian motion governs the inventory level variation. We consider a single storage facility with infinite capacity and assume that shortages are allowed and the total amount of stock-out is a mixture of backordering and lost sales. In addition, the production facility is controlled by a two-parameter ( m, M ) policy, which switches the production rate when the inventory level reaches the threshold values. The aim is to determine the optimal control parameters m and M by minimising the long-run total expected cost of the system. Some results are illustrated using numerical examples. A sensitivity analysis of the optimal solution with respect to major parameters is also carried out.