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Production control with backlog-dependent demand.
- Source :
-
IIE Transactions . Jun2009, Vol. 41 Issue 6, p511-523. 13p. 6 Graphs. - Publication Year :
- 2009
-
Abstract
- A manufacturing firm that builds a product to stock to meet a random demand is studied. Production time is deterministic, so that if there is a backlog, customers are quoted a lead time that is proportional to the backlog. In order to represent the customers' response to waiting, a defection function—the fraction of customers who choose not to order as a function of the quoted lead time—is introduced. Unlike models with backorder costs, the defection function is related to customer behavior. Using a continuous flow control model with linear holding cost and Markov modulated demand, it is shown that the optimal production policy has a hedging point form. The performance of the system under this policy is evaluated, allowing the optimal hedging point to be found. [Supplementary materials are available for this article. Go to the publisher's online edition of IIE Transactions for the following free supplemental resource: Appendix] [ABSTRACT FROM AUTHOR]
Details
- Language :
- English
- ISSN :
- 0740817X
- Volume :
- 41
- Issue :
- 6
- Database :
- Academic Search Index
- Journal :
- IIE Transactions
- Publication Type :
- Academic Journal
- Accession number :
- 37195035
- Full Text :
- https://doi.org/10.1080/07408170801975040