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Dynamic Scheduling in a Make-to-Stock System: A Partial Characterization of Optimal Policies

Laboratoire d'Informatique de Paris 6 (LIP6-CNRS), Universite Pierre et Marie Curie, Paris, France
Laboratoire Productique Logistique, Ecole Centrale Paris, Chatenay-malabry, France
Laboratoire Productique Logistique, Ecole Centrale Paris, Chatenay-malabry, France
francis.vericourt{at}lip6.fr
fikri{at}pl.ecp.fr
dallery{at}pl.ecp.fr

We consider the problem of dynamically allocating production capacity between two products to minimize the average inventory and backorder costs per unit time in a make-to-stock single machine system. Using sample path comparisons and dynamic programming, we give a characterization of the optimal hedging point policy for a certain region of the state space. The characterization is simple enough to lead to easily implementable heuristics and provides a formal justification of some of the earlier heuristics proposed.

Subject classifications: Production/scheduling, Stochastic: multi-item; Queues: make-to-stock system; Inventory/production: optimal policies.
History: Received May 1998; revision received November 1998; revision received February 1999; accepted March 1999.

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