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| Author: | Angelus, A. Porteus, E. L. |
| Title: | Simultaneous Capacity and Production Management of Short-Life-Cycle, Produce-to-Stock Goods Under Stochastic Demand |
| Journal: | Management Science
2002 : MAR, VOL. 48:3, p. 399-413 |
| Index terms: | MANAGEMENT PRODUCTION MANAGEMENT CAPACITY COSTS DEMAND |
| Language: | eng |
| Abstract: | This paper derives the optimal simultaneous capacity and production plan for a short-life-cycle, produce-to-stock good under stochastic demand. Capacity can be reduced as well as added, at exogenously set unit prices. In both cases studied, with and without carryover of unsold units, a target interval policy is optimal: There is a (usually different) target interval for each period such that capacity should be changed as little as possible to bring the level available into that interval. The authors' contribution in the case of no carry-over, is a detailed characterization of the target intervals, assuming demands increase stochastically at the beginning of the life cycle and decrease thereafter. |
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