The joint stock and capacity rationings of a make-to-stock system with flexible demand
This paper studies the joint stock and production capacity rationing polices for a make-to-stock system with two partially substitutable products manufactured at two factories, respectively. Customers are classified into three types with each type further segmented into multiple classes. Type I and T...
| Main Authors: | , , , |
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| Other Authors: | |
| Format: | Journal Article |
| Language: | English |
| Published: |
2019
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| Subjects: | |
| Online Access: | https://hdl.handle.net/10356/89851 http://hdl.handle.net/10220/47733 |
| _version_ | 1811678678824779776 |
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| author | Lin, Bing Chen, Shaoxiang Feng, Yi Xu, Jianjun |
| author2 | Nanyang Business School |
| author_facet | Nanyang Business School Lin, Bing Chen, Shaoxiang Feng, Yi Xu, Jianjun |
| author_sort | Lin, Bing |
| collection | NTU |
| description | This paper studies the joint stock and production capacity rationing polices for a make-to-stock system with two partially substitutable products manufactured at two factories, respectively. Customers are classified into three types with each type further segmented into multiple classes. Type I and Type II customers are selective and accept their favorite products only. Type III accepts either of the two products and hence its demand is regarded as the flexible demand. The management has to decide whether to run or stop production and whether the various classes of demand for each type of customers have to be satisfied from available inventory or not - in which case demand is lost - in order to minimize the firm’s inventory and production costs. We formulate the problem as a make-to-stock queue system and characterize the optimal joint stock and production rationing policies as monotone switching curves. Numerical examples are given to illustrate the optimal policies and demonstrate the value of flexible demand. Moreover, we develop a simple heuristic policy and compare the costs associated with the optimal and heuristic policies for different parameters. |
| first_indexed | 2024-10-01T02:57:05Z |
| format | Journal Article |
| id | ntu-10356/89851 |
| institution | Nanyang Technological University |
| language | English |
| last_indexed | 2024-10-01T02:57:05Z |
| publishDate | 2019 |
| record_format | dspace |
| spelling | ntu-10356/898512023-05-19T06:44:43Z The joint stock and capacity rationings of a make-to-stock system with flexible demand Lin, Bing Chen, Shaoxiang Feng, Yi Xu, Jianjun Nanyang Business School DRNTU::Business::Operations management Production Inventory This paper studies the joint stock and production capacity rationing polices for a make-to-stock system with two partially substitutable products manufactured at two factories, respectively. Customers are classified into three types with each type further segmented into multiple classes. Type I and Type II customers are selective and accept their favorite products only. Type III accepts either of the two products and hence its demand is regarded as the flexible demand. The management has to decide whether to run or stop production and whether the various classes of demand for each type of customers have to be satisfied from available inventory or not - in which case demand is lost - in order to minimize the firm’s inventory and production costs. We formulate the problem as a make-to-stock queue system and characterize the optimal joint stock and production rationing policies as monotone switching curves. Numerical examples are given to illustrate the optimal policies and demonstrate the value of flexible demand. Moreover, we develop a simple heuristic policy and compare the costs associated with the optimal and heuristic policies for different parameters. Accepted version 2019-02-27T08:24:30Z 2019-12-06T17:35:02Z 2019-02-27T08:24:30Z 2019-12-06T17:35:02Z 2018 Journal Article Lin, B., Chen, S., Feng, Y., & Xu, J. (2018). The joint stock and capacity rationings of a make-to-stock system with flexible demand. Asia-Pacific Journal of Operational Research, 35(01), 1850004-1-27. doi:10.1142/S0217595918500045 0217-5959 https://hdl.handle.net/10356/89851 http://hdl.handle.net/10220/47733 10.1142/S0217595918500045 en Asia-Pacific Journal of Operational Research © 2018 World Scientific Publishing & Operational Research Society of Singapore. All rights reserved. This paper was published in Asia-Pacific Journal of Operational Research and is made available with permission of World Scientific Publishing & Operational Research Society of Singapore. 27 p. application/pdf |
| spellingShingle | DRNTU::Business::Operations management Production Inventory Lin, Bing Chen, Shaoxiang Feng, Yi Xu, Jianjun The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title | The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title_full | The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title_fullStr | The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title_full_unstemmed | The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title_short | The joint stock and capacity rationings of a make-to-stock system with flexible demand |
| title_sort | joint stock and capacity rationings of a make to stock system with flexible demand |
| topic | DRNTU::Business::Operations management Production Inventory |
| url | https://hdl.handle.net/10356/89851 http://hdl.handle.net/10220/47733 |
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