Two hedging points policy for an unreliable manufacturing system

Tom 29 / 2002

Ryszarda Rempała Applicationes Mathematicae 29 (2002), 313-330 MSC: Primary 90B05. DOI: 10.4064/am29-3-5


This paper deals with an unreliable manufacturing system in which limited backlog is allowed. An admissible production policy is described by two decision parameters: upper and lower hedging points. The objective is to find the optimum hedging points so as to minimize the long run average expected cost under an additional condition. The condition expresses a constraint for the limiting probability of the event that the system stays at the lower hedging point, which corresponds to a limit of backlog. The cost consists of two parts: holding inventory cost and shortage cost. The optimum hedging points are determined.


  • Ryszarda RempałaInstitute of Mathematics
    Polish Academy of Sciences
    Śniadeckich 8
    00-950 Warszawa, Poland

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