Stock rationing in an M/E(k)/1 make-to-stock queue

The stock rationing problem of the single-item, make-to-stock production system with several demand classes and lost sales is considered. When demand is Poisson and processing time has an Erlang distribution, it is shown that a single-state variable called work storage level can be employed to compl...

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Bibliographic Details
Published inManagement science Vol. 46; no. 1; p. 77
Main Author Ha, Albert Y
Format Journal Article
LanguageEnglish
Published Linthicum Institute for Operations Research and the Management Sciences 01.01.2000
Subjects
Applications
Dynamic programming
Inventory control
Management science
Mathematical models
Queuing theory
Studies
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Summary:The stock rationing problem of the single-item, make-to-stock production system with several demand classes and lost sales is considered. When demand is Poisson and processing time has an Erlang distribution, it is shown that a single-state variable called work storage level can be employed to completely capture the information regarding inventory level and the status of current production. The optimal rationing policy can be characterized by a sequence of monotone critical work storage levels. For each demand class, there exists a work storage level at or below which it is optimal to start rejecting the demand of this class in anticipation of future arrival of higher-priority demands.
ISSN:0025-1909
1526-5501