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Optimal Production Controls in a Two-Stage Production System with a Component Selling Option
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 Title & Authors
Optimal Production Controls in a Two-Stage Production System with a Component Selling Option
Kim, Eungab;
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This paper considers a two-stage make-to-stock production system. The first stage produces a single-component and the second stage produces a make-to-stock product using components. In addition to internal demands, the first stage faces external demands with the option of accepting or rejecting. To ration component inventory, the manufacturer adopts a static rule. This paper analyzes the production controls at both facilities that maximizes the manufacturer's profit. Using the Markov decision process model, we characterize the optimal production policy by two monotonic switching curves.
Two-stage production system;Component selling;Production control;Inventory rationing;Make-to-stock;
 Cited by
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