Optimal pricing and production control in an assembly system with a general stockout cost

Matthew F. Keblis; Youyi Feng

doi:10.1109/TAC.2011.2178335

Optimal pricing and production control in an assembly system with a general stockout cost

Matthew F. Keblis^*, Youyi Feng

^*Corresponding author for this work

Macquarie Graduate School of Management

Research output: Contribution to journal › Article › peer-review

21 Citations (Scopus)

Abstract

We study the optimal control of an assembly system used to produce an assemble-to-order end product. We determine how to manage component production and end product price in order to maximize total discounted profit over an infinite horizon. We show the optimal production control is a state dependent base-stock policy and the optimal price adjustment is given by a threshold switching policy.

Original language	English
Article number	6096369
Pages (from-to)	1821-1826
Number of pages	6
Journal	IEEE Transactions on Automatic Control
Volume	57
Issue number	7
DOIs	https://doi.org/10.1109/TAC.2011.2178335
Publication status	Published - 2012

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10.1109/TAC.2011.2178335

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Optimal pricing and production control in an assembly system with a general stockout cost

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