The Compensation Method Applied to a One-Product Production Inventory Problem
This paper considers a one-product, one-machine production/inventory probelm. Demand requests for the product are governed by a Poisson process with demand size being an exponential random variable. The production facility may be in production or idle; while in production, the facility produces cont...
| Main Authors: | , |
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| Format: | Working Paper |
| Language: | en_US |
| Published: |
Massachusetts Institute of Technology, Operations Research Center
2004
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| Online Access: | http://hdl.handle.net/1721.1/5364 |
| _version_ | 1826210884120215552 |
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| author | Graves, Stephen C. Keilson, Julian |
| author_facet | Graves, Stephen C. Keilson, Julian |
| author_sort | Graves, Stephen C. |
| collection | MIT |
| description | This paper considers a one-product, one-machine production/inventory probelm. Demand requests for the product are governed by a Poisson process with demand size being an exponential random variable. The production facility may be in production or idle; while in production, the facility produces continuously at a constant rate. The objective is to minimize system costs consisting of setup costs, inventory holding costs, and backorder costs. Given a two-critical-number policy, the problem is analyzed as a constrained Markov process using the compensation method. The policy space may then be searched to find the optimal policy. |
| first_indexed | 2024-09-23T14:57:19Z |
| format | Working Paper |
| id | mit-1721.1/5364 |
| institution | Massachusetts Institute of Technology |
| language | en_US |
| last_indexed | 2024-09-23T14:57:19Z |
| publishDate | 2004 |
| publisher | Massachusetts Institute of Technology, Operations Research Center |
| record_format | dspace |
| spelling | mit-1721.1/53642019-04-12T08:16:31Z The Compensation Method Applied to a One-Product Production Inventory Problem Graves, Stephen C. Keilson, Julian This paper considers a one-product, one-machine production/inventory probelm. Demand requests for the product are governed by a Poisson process with demand size being an exponential random variable. The production facility may be in production or idle; while in production, the facility produces continuously at a constant rate. The objective is to minimize system costs consisting of setup costs, inventory holding costs, and backorder costs. Given a two-critical-number policy, the problem is analyzed as a constrained Markov process using the compensation method. The policy space may then be searched to find the optimal policy. Research supported, in part, by the Office of Naval Research under Contract N00014-75-C-0556. 2004-05-28T19:35:50Z 2004-05-28T19:35:50Z 1978-07 Working Paper http://hdl.handle.net/1721.1/5364 en_US Operations Research Center Working Paper;OR 077-78 1746 bytes 1082337 bytes application/pdf application/pdf Massachusetts Institute of Technology, Operations Research Center |
| spellingShingle | Graves, Stephen C. Keilson, Julian The Compensation Method Applied to a One-Product Production Inventory Problem |
| title | The Compensation Method Applied to a One-Product Production Inventory Problem |
| title_full | The Compensation Method Applied to a One-Product Production Inventory Problem |
| title_fullStr | The Compensation Method Applied to a One-Product Production Inventory Problem |
| title_full_unstemmed | The Compensation Method Applied to a One-Product Production Inventory Problem |
| title_short | The Compensation Method Applied to a One-Product Production Inventory Problem |
| title_sort | compensation method applied to a one product production inventory problem |
| url | http://hdl.handle.net/1721.1/5364 |
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