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| Author: | Bradley, J. R. Glynn, P. W. |
| Title: | Managing Capacity and Inventory Jointly in Manufacturing Systems |
| Journal: | Management Science
2002 : FEB, VOL. 48:2, p. 273-288 |
| Index terms: | MANAGEMENT INVENTORY CONTROL MANUFACTURING INDUSTRY SYSTEMS ANALYSIS |
| Language: | eng |
| Abstract: | In this paper, the authors develop approximations that yield insight into the joint optimization of capacity and inventory, and how the optimal inventory policy varies with capacity investment in a single-product, single- station, make-to-stock manufacturing system in which inventory is managed through a base-stock policy. The authors allow for a correlated demand stream as the authors analyze the authors' models in an asymptotic regime, in which the penalty and holding costs are small relative to the cost of capacity. Although the approximations are asymptotically correct, the authors' Brownian approximation is accurate even under moderate traffic intensity. |
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