Asymptotically Optimal Control of Make-to-Stock Systems

Xuefeng Gao () and Junfei Huang ()
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Xuefeng Gao: Department of Systems Engineering and Engineering Management, The Chinese University of Hong Kong, Hong Kong SAR, China
Junfei Huang: Department of Decisions, Operations and Technology, CUHK Business School, The Chinese University of Hong Kong, Hong Kong SAR, China

Mathematics of Operations Research, 2024, vol. 49, issue 2, 948-985

Abstract: We consider multiclass make-to-stock production/inventory systems in which the manager makes three decisions, including pricing, outsourcing, and scheduling, to maximize the long-run average profit. For a sequence of systems in the heavy-traffic regime, with linear or strictly convex holding/waiting cost functions, we propose a sequence of policies and establish its asymptotic optimality. Our proof combines the lower bound approach and a thorough steady-state analysis of the systems. We also establish general results on the existence and tightness of the stationary distributions of the state processes under a more general family of policies.

Keywords: Primary: 60K30; 93E20; secondary: 90B22; 90B05; make-to-stock; heavy traffic; steady-state analysis; asymptotically optimal control (search for similar items in EconPapers)
Date: 2024
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