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Optimal Production-Inventory Policy for a Periodic-Review Energy Buy-Back System over an Infinite Planning Horizon

Author

Listed:
  • Hong-Qiao Chen

    (School of Management & Engineering, Nanjing University, Nanjing, Jiangsu Province 210008, P. R. China)

  • Xiao-Song Ding

    (International Business School, Beijing Foreign Studies University, Beijing 100089, P. R. China)

  • Ji-Hong Zhang

    (International Business School, Beijing Foreign Studies University, Beijing 100089, P. R. China)

  • Hua-Yi Li

    (BNU Business School, Beijing Normal University, Beijing 100875, P. R. China)

Abstract

This paper studies a periodic-review production-inventory control model under an energy buy-back program over an infinite planning horizon, in which a fixed setup cost and compensation levels corresponding to various market states are involved. The objective is to identify the manufacturer’s optimal production-inventory policy that can minimize his total discounted cost or long-run average cost. By using Veinott’s conditions, it is shown that such a state dependent optimal policy is of either an (si,S), or partly an (s0,S,A) type.

Suggested Citation

  • Hong-Qiao Chen & Xiao-Song Ding & Ji-Hong Zhang & Hua-Yi Li, 2020. "Optimal Production-Inventory Policy for a Periodic-Review Energy Buy-Back System over an Infinite Planning Horizon," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 37(02), pages 1-32, March.
    • Handle: RePEc:wsi:apjorx:v:37:y:2020:i:02:n:s0217595920500013
    DOI: 10.1142/S0217595920500013
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    References listed on IDEAS

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