Performance Analysis of a Fluid Production/Inventory Model with State-dependence

Oded Berman (), David Perry () and Wolfgang Stadje ()
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Oded Berman: University of Toronto
David Perry: University of Haifa
Wolfgang Stadje: University of Osnabrück

Methodology and Computing in Applied Probability, 2007, vol. 9, issue 4, 465-481

Abstract: Abstract We study the long-run average performance of a fluid production/ inventory model which alternates between ON periods and OFF periods. During ON periods of random lengths items are added continuously, at some state-dependent rate, to the inventory. During OFF periods the content decreases (again at some state-dependent rate) back to some basic level. We derive the pertinent reward functionals in closed form. For this analysis the steady-state distributions of the stock level process and its jump counterpart are required. In several examples we use the obtained explicit formulas to maximize the long-run average net revenue numerically.

Keywords: production/inventory model; fluid model; EOQ; state-dependent production rate; reward functionals; stock-level process; long-run average revenue; maximization; Primary 90B05; 90B30; Secondary 60K10 (search for similar items in EconPapers)
Date: 2007
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Citations: View citations in EconPapers (2)

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DOI: 10.1007/s11009-006-9000-8

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