The Optimality of Hedging Point Policies for Stochastic Two-Product Flexible Manufacturing Systems

Chen Shaoxiang ()
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Chen Shaoxiang: Nanyang Business School, Nanyang Technological University, Singapore 639797

Operations Research, 2004, vol. 52, issue 2, 312-322

Abstract: This paper studies the stochastic two-item, periodic review, single facility, flexible manufacturing systems, where stochasticity comes from random demands or/and unreliable production process. Based on a notion called (mu) -difference monotone introduced in this paper, we prove that the hedging point policy is optimal to the systems in general for both finite and infinite horizon cases of the problems. This result is (demand) distribution free and does not require strict convexity or even differentiability of the one-period expected cost function. A general characterization of the hedging point policy, together with monotone switching curves, is provided.

Keywords: inventory/production: multi-item; stochastic; policies; planning horizon; production/scheduling: flexible manufacturing; stochastic; dynamic program/optimal control: application; models (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (6)

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Persistent link: https://EconPapers.repec.org/RePEc:inm:oropre:v:52:y:2004:i:2:p:312-322

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