Optimal Production-Inventory Policy for a Periodic-Review Energy Buy-Back System over an Infinite Planning Horizon

Hong-Qiao Chen (), Xiao-Song Ding (), Ji-Hong Zhang and Hua-Yi Li ()
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Hong-Qiao Chen: School of Management & Engineering, Nanjing University, Nanjing, Jiangsu Province 210008, P. R. China
Xiao-Song Ding: International Business School, Beijing Foreign Studies University, Beijing 100089, P. R. China
Ji-Hong Zhang: International Business School, Beijing Foreign Studies University, Beijing 100089, P. R. China
Hua-Yi Li: BNU Business School, Beijing Normal University, Beijing 100875, P. R. China

Asia-Pacific Journal of Operational Research (APJOR), 2020, vol. 37, issue 02, 1-32

Abstract: This paper studies a periodic-review production-inventory control model under an energy buy-back program over an infinite planning horizon, in which a fixed setup cost and compensation levels corresponding to various market states are involved. The objective is to identify the manufacturer’s optimal production-inventory policy that can minimize his total discounted cost or long-run average cost. By using Veinott’s conditions, it is shown that such a state dependent optimal policy is of either an (si,S), or partly an (s0,S,A) type.

Keywords: Production-inventory model; energy buy-back program; compensation level; setup cost; Veinott’s conditions (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S0217595920500013

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