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

Francis De Vericourt, Fikri Karaesmen, Yves Dallery

Operations Research · 2000 · Volume 48 · Issue 5

Abstract

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.

Keywords

Production/scheduling, Stochastic: multi-item, Queues: make-to-stock system, Inventory/production: optimal policies

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