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| Author: | Ha, A. Y. |
| Title: | Inventory rationing in a make-to-stock production system with several demand classes and lost sales. |
| Journal: | Management Science
1997 : AUG, VOL. 42:8, p. 1093-1103 |
| Index terms: | OPTIMAL CONTROL THEORY OPERATIONAL RESEARCH INVENTORY CONTROL POISSON DISTRIBUTION |
| Language: | eng |
| Abstract: | This paper considers the stock rationing problem of a single-item, make-to-stock production system with several demand classes and lost sales. For the case of Poisson demands and exponential production times, the author shows that the optimal policy can be characterized by a sequence of monotone stock rationing levels. For each demand class, there exists a stock rationing level at or below which it is optimal to start rejecting the demand of this class in anticipation of future arrival of higher priority demands. A simple queuing model is analyzed to compute the operating cost of a rationing policy. In a numerical study, the author compares the optimal rationing policy with a first- come first-served policy to investigate the benefit of stock rationing under different operating conditions of the system. |
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