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Asymptotic analysis for a production–inventory control model with renewal arrivals and exponential demands

Published online by Cambridge University Press:  14 July 2016

A. G. De kok
A. G. De kok*
Affiliation:
Vrije Universiteit
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Abstract

We consider a production–inventory problem in which the production rate can be dynamically adjusted to cope with random fluctuations in demand. Customers arrive according to a renewal process, and the customer's demand is assumed to be exponentially distributed. Excess demand is backlogged. The production is controlled by a two-critical-number rule that prescribes which one of the two possible production rates must be used. Tractable expressions are given for several services measures including the fraction of demand backlogged. The analysis is based on the results for hitting probabilities in random walks, where the jump distribution has an exponential right or left tail.

Keywords

VARIABLE PRODUCTION RATESWITCH-OVER RULESERVICE MEASURESHITTING PROBABILITIES IN RANDOM WALKS
Type
Research Papers
Information
Journal of Applied Probability , Volume 22 , Issue 3 , September 1985 , pp. 653 - 667
Copyright
Copyright © Applied Probability Trust 1985 

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