Two-period production planning and inventory control

Christian van Delft (), Ali Cheaitoua, Yves Dallery () and Z. Jemai ()
Additional contact information
Christian van Delft: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique
Ali Cheaitoua: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Yves Dallery: GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique, LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
Z. Jemai: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec

Post-Print from HAL

Abstract: We study a single product two-period production/inventory model, in which the demands at each period are independent random variables. To optimally satisfy these random demands, quantities can be produced at the beginning of each period using slow or fast production mode, under capacity constraints. In addition to the usual decision variables for such models, we consider that a certain quantity can be salvaged at the beginning of each period. Such salvage processes are useful if the initial inventory of a period is considered to be too high. The unsatisfied demands for each period are backlogged to be satisfied during the next periods. After the end of the second period, a last quantity is produced in order to satisfy remaining orders and to avoid lost sales. The remaining inventory, if any, is salvaged. We formulate this model using a dynamic programming approach. We prove the concavity of the global objective function and we establish the closed-form expression of the second period optimal policy. Then, via a numerical solution approach, we solve the first period problem and exhibit the structure of the corresponding optimal policy. We provide insights, via numerical examples, that characterize the basic properties of our model and the effect of some significant parameters such as costs, demand variabilities or capacity constraints.

Keywords: Stochastic production and inventory planning; Capacity constraints; Salvage opportunities; Dynamic programming (search for similar items in EconPapers)
Date: 2009-03
References: Add references at CitEc
Citations: View citations in EconPapers (9)

Published in International Journal of Production Economics, 2009, Vol.118,n°1, pp.118-130. ⟨10.1016/j.ijpe.2008.08.031⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00471430

DOI: 10.1016/j.ijpe.2008.08.031

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().