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An inventory and order admission control policy for production systems with two customer classes

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  • Ioannidis, Stratos

Abstract

In this paper we examine a Markovian single-stage system producing a single item to satisfy demand of two different customer classes. A simple threshold type heuristic policy is proposed for the joint control of inventories and backorders. Explicit forms of the steady-state probabilities under this policy are derived and used to assess the average profit rate of the system and determine the optimal control parameters. Certain properties of the average profit rate are established and used to develop computationally efficient algorithms for finding the optimal control parameter values. Numerical results show that the proposed policy is a very good approximation of the optimal policy and outperforms other commonly used policies.

Suggested Citation

  • Ioannidis, Stratos, 2011. "An inventory and order admission control policy for production systems with two customer classes," International Journal of Production Economics, Elsevier, vol. 131(2), pages 663-673, June.
    • Handle: RePEc:eee:proeco:v:131:y:2011:i:2:p:663-673
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    References listed on IDEAS

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    Cited by:

    1. Belleh Fontem & Megan Price, 2021. "Joint client selection and contract design for a risk-averse commodity broker in a two-echelon supply chain," Annals of Operations Research, Springer, vol. 307(1), pages 111-138, December.
    2. Ma, Weina & Hekimoğlu, Mustafa & Dekker, Rommert, 2023. "Admission control for a capacitated supply system with real-time replenishment information," International Journal of Production Economics, Elsevier, vol. 266(C).
    3. Kim, Eungab, 2012. "Centralized admission and production control in a two-stage supply chain with single component and customized products," International Journal of Production Economics, Elsevier, vol. 140(1), pages 530-540.
    4. Stratos Ioannidis & Alexandros S. Xanthopoulos & Ioannis Sarantis & Dimitrios E. Koulouriotis, 2021. "Joint production, inventory rationing, and order admission control of a stochastic manufacturing system with setups," Operational Research, Springer, vol. 21(2), pages 827-855, June.
    5. Kim, Eungab & Park, Taeho, 2016. "Admission and inventory control of a single-component make-to-order production system with replenishment setup cost and lead time," European Journal of Operational Research, Elsevier, vol. 255(1), pages 91-102.
    6. Liu, Mingwu & Feng, Mengying & Wong, Chee Yew, 2014. "Flexible service policies for a Markov inventory system with two demand classes," International Journal of Production Economics, Elsevier, vol. 151(C), pages 180-185.

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