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Economic consequences of a production and inventory control policy

Disney, Stephen Michael and Grubbström, R. W. 2004. Economic consequences of a production and inventory control policy. International Journal of Production Research 42 (17) , pp. 3419-3431. 10.1080/00207540410001727640

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Abstract

The economic performance of a generalized Order-Up-To policy is investigated in response to an Auto Regressive stochastic demand process. Focus is on the case where the physical production/distribution lead time is one period and where demand is forecasted with simple exponential smoothing. Two sets of convex piece-wise linear costs are considered. The first set is the traditional inventory holding and backlog costs. The second set of costs is piece-wise linear and increasing convex costs associated with the production order rate within and above a capacity constraint. Numerical investigations reveal that the classical Order-Up-To policy is no longer optimal when a broader range of costs is considered in the objective function.

Item Type: Article
Date Type: Publication
Status: Published
Schools: Business (Including Economics)
Centre for Advanced Manufacturing Systems At Cardiff (CAMSAC)
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor
H Social Sciences > HF Commerce
H Social Sciences > HF Commerce > HF5601 Accounting
Publisher: Taylor & Francis
ISSN: 0020-7543
Date of First Compliant Deposit: 30 March 2016
Last Modified: 04 Jun 2017 11:05
URI: http://orca.cf.ac.uk/id/eprint/42223

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