Control policies for single-stage production systemls with perishable inventory and customer impatience

Stratos Ioannidis (), Oualid Jouini (), Angelos A Economopoulos () and Vassilis S Kouikoglou ()
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Stratos Ioannidis: Department of Mathematics - University of the Aegean
Oualid Jouini: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec, Pôle de Recherche - Rouen Business School - Rouen Business School
Angelos A Economopoulos: Dept of Production Engineering and Management - TUC - Technical University of Crete [Chania]
Vassilis S Kouikoglou: Dept of Production Engineering and Management - TUC - Technical University of Crete [Chania]

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Abstract: We consider problems of inventory and admission control for make-to-stock production systems with perishable inventory and impatient customers. Customers may balk upon arrival (refuse to place orders) and renege while waiting (withdraw delayed orders) during stockouts. Item lifetimes and customer patience times are random variables with general distributions. Processing, setup, and customer inter-arrival times are however assumed to be exponential random variables. In particular, the paper studies two models. In the first model, the system suspends its production when its stock reaches a safety level and can resume later without incurring any setup delay or cost. In the second model, the system incurs setup delays and setup costs; during stockouts, all arriving customers are informed about anticipated delays and either balk or place their orders but cannot withdraw them later. Using results from the queueing literature, we derive expressions for the system steady-state probabilities and performance measures, such as profit from sales and costs of inventory, setups, and delays in filling customer orders. We use these expressions to find optimal inventory and admission policies, and investigate the impact of product lifetimes and customer patience times on system performance.

Keywords: lead time estimation.; queueing systems; perishable inventory; customer impatience; make-to-stock production; admission control; lead time estimation (search for similar items in EconPapers)
Date: 2012-01
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Citations: View citations in EconPapers (2)

Published in Annals of Operations Research, 2012, n.p. ⟨10.1007/s10479-012-1058-9⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00802145

DOI: 10.1007/s10479-012-1058-9

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