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

Matthew F. Keblis*, Youyi Feng

*Corresponding author for this work

Research output: Contribution to journalArticle

16 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 languageEnglish
Article number6096369
Pages (from-to)1821-1826
Number of pages6
JournalIEEE Transactions on Automatic Control
Volume57
Issue number7
DOIs
Publication statusPublished - 2012

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