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Performance analysis of a reflected fluid production/inventory model

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  • Yonit Barron

    (Ariel Univertsity)

Abstract

We study the performance of a reflected fluid production/inventory model operating in a stochastic environment that is modulated by a finite state continuous time Markov chain. The process alternates between ON and OFF periods. The ON period is switched to OFF when the content level reaches a predetermined level q and returns to ON when it drops to 0. The ON/OFF periods generate an alternative renewal process. Applying a matrix analytic approach, fluid flow techniques and martingales, we develop methods to obtain explicit formulas for the cost functionals (setup, holding, production and lost demand costs) in the discounted case and under the long-run average criterion. Numerical examples present the trade-off between the holding cost and the loss cost and show that the total cost appears to be a convex function of q.

Suggested Citation

  • Yonit Barron, 2016. "Performance analysis of a reflected fluid production/inventory model," Mathematical Methods of Operations Research, Springer;Gesellschaft für Operations Research (GOR);Nederlands Genootschap voor Besliskunde (NGB), vol. 83(1), pages 1-31, February.
    • Handle: RePEc:spr:mathme:v:83:y:2016:i:1:d:10.1007_s00186-015-0517-x
    DOI: 10.1007/s00186-015-0517-x
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    Cited by:

    1. (Ai-Chih) Chang, Jasmine & Lu, Haibing & (Junmin) Shi, Jim, 2019. "Stockout risk of production-inventory systems with compound Poisson demands," Omega, Elsevier, vol. 83(C), pages 181-198.
    2. Baek, Jung Woo & Bae, Yun Han, 2022. "A queuing-inventory model for manufacturing systems with fluid-type inventory," Omega, Elsevier, vol. 111(C).
    3. Yonit Barron, 2022. "A probabilistic approach to the stochastic fluid cash management balance problem," Annals of Operations Research, Springer, vol. 312(2), pages 607-645, May.

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