IDEAS home Printed from https://ideas.repec.org/a/eee/proeco/v131y2011i2p663-673.html
   My bibliography  Save this article

An inventory and order admission control policy for production systems with two customer classes

Author

Listed:
  • Ioannidis, Stratos

Abstract

In this paper we examine a Markovian single-stage system producing a single item to satisfy demand of two different customer classes. A simple threshold type heuristic policy is proposed for the joint control of inventories and backorders. Explicit forms of the steady-state probabilities under this policy are derived and used to assess the average profit rate of the system and determine the optimal control parameters. Certain properties of the average profit rate are established and used to develop computationally efficient algorithms for finding the optimal control parameter values. Numerical results show that the proposed policy is a very good approximation of the optimal policy and outperforms other commonly used policies.

Suggested Citation

  • Ioannidis, Stratos, 2011. "An inventory and order admission control policy for production systems with two customer classes," International Journal of Production Economics, Elsevier, vol. 131(2), pages 663-673, June.
    • Handle: RePEc:eee:proeco:v:131:y:2011:i:2:p:663-673
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0925-5273(11)00068-5
    Download Restriction: Full text for ScienceDirect subscribers only
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Melchiors, Philip, 2003. "Restricted time-remembering policies for the inventory rationing problem," International Journal of Production Economics, Elsevier, vol. 81(1), pages 461-468, January.
    2. Sridharan, Sri V., 1998. "Managing capacity in tightly constrained systems," International Journal of Production Economics, Elsevier, vol. 56(1), pages 601-610, September.
    3. Lee, Jeong Eun & Hong, Yushin, 2003. "A stock rationing policy in a (s,S)-controlled stochastic production system with 2-phase Coxian processing times and lost sales," International Journal of Production Economics, Elsevier, vol. 83(3), pages 299-307, March.
    4. Albert Y. Ha, 1997. "Inventory Rationing in a Make-to-Stock Production System with Several Demand Classes and Lost Sales," Management Science, INFORMS, vol. 43(8), pages 1093-1103, August.
    5. Fransoo, Jan C. & Sridharan, V. & Bertrand, J.Will M., 1995. "A hierarchical approach for capacity coordination in multiple products single-machine production systems with stationary stochastic demands," European Journal of Operational Research, Elsevier, vol. 86(1), pages 57-72, October.
    6. Francis de Véricourt & Fikri Karaesmen & Yves Dallery, 2002. "Optimal Stock Allocation for a Capacitated Supply System," Management Science, INFORMS, vol. 48(11), pages 1486-1501, November.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ma, Weina & Hekimoğlu, Mustafa & Dekker, Rommert, 2023. "Admission control for a capacitated supply system with real-time replenishment information," International Journal of Production Economics, Elsevier, vol. 266(C).
    2. Kim, Eungab, 2012. "Centralized admission and production control in a two-stage supply chain with single component and customized products," International Journal of Production Economics, Elsevier, vol. 140(1), pages 530-540.
    3. Stratos Ioannidis & Alexandros S. Xanthopoulos & Ioannis Sarantis & Dimitrios E. Koulouriotis, 2021. "Joint production, inventory rationing, and order admission control of a stochastic manufacturing system with setups," Operational Research, Springer, vol. 21(2), pages 827-855, June.
    4. Belleh Fontem & Megan Price, 2021. "Joint client selection and contract design for a risk-averse commodity broker in a two-echelon supply chain," Annals of Operations Research, Springer, vol. 307(1), pages 111-138, December.
    5. Liu, Mingwu & Feng, Mengying & Wong, Chee Yew, 2014. "Flexible service policies for a Markov inventory system with two demand classes," International Journal of Production Economics, Elsevier, vol. 151(C), pages 180-185.
    6. Kim, Eungab & Park, Taeho, 2016. "Admission and inventory control of a single-component make-to-order production system with replenishment setup cost and lead time," European Journal of Operational Research, Elsevier, vol. 255(1), pages 91-102.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Mayorga, Maria E. & Ahn, Hyun-Soo, 2011. "Joint management of capacity and inventory in make-to-stock production systems with multi-class demand," European Journal of Operational Research, Elsevier, vol. 212(2), pages 312-324, July.
    2. Teunter, Ruud H. & Klein Haneveld, Willem K., 2008. "Dynamic inventory rationing strategies for inventory systems with two demand classes, Poisson demand and backordering," European Journal of Operational Research, Elsevier, vol. 190(1), pages 156-178, October.
    3. Mohammad Najjartabar Bisheh & G. Reza Nasiri & Esmaeil Esmaeili & Hamid Davoudpour & Shing I. Chang, 2022. "A new supply chain distribution network design for two classes of customers using transfer recurrent neural network," International Journal of System Assurance Engineering and Management, Springer;The Society for Reliability, Engineering Quality and Operations Management (SREQOM),India, and Division of Operation and Maintenance, Lulea University of Technology, Sweden, vol. 13(5), pages 2604-2618, October.
    4. Alfieri, Arianna & Pastore, Erica & Zotteri, Giulio, 2017. "Dynamic inventory rationing: How to allocate stock according to managerial priorities. An empirical study," International Journal of Production Economics, Elsevier, vol. 189(C), pages 14-29.
    5. Liu, Shudong & Song, Miao & Tan, Kok Choon & Zhang, Changyong, 2015. "Multi-class dynamic inventory rationing with stochastic demands and backordering," European Journal of Operational Research, Elsevier, vol. 244(1), pages 153-163.
    6. Modarres, Mohammad & Sharifyazdi, Mehdi, 2009. "Revenue management approach to stochastic capacity allocation problem," European Journal of Operational Research, Elsevier, vol. 192(2), pages 442-459, January.
    7. Samii, Amir-Behzad, 2016. "Impact of nested inventory allocation policies in a newsvendor setting," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 247-256.
    8. Bijvank, Marco & Vis, Iris F.A., 2011. "Lost-sales inventory theory: A review," European Journal of Operational Research, Elsevier, vol. 215(1), pages 1-13, November.
    9. FadIloglu, Mehmet Murat & Bulut, Önder, 2010. "A dynamic rationing policy for continuous-review inventory systems," European Journal of Operational Research, Elsevier, vol. 202(3), pages 675-685, May.
    10. Tempelmeier, Horst, 2006. "Supply chain inventory optimization with two customer classes in discrete time," European Journal of Operational Research, Elsevier, vol. 174(1), pages 600-621, October.
    11. Saif Benjaafar & Mohsen ElHafsi & Tingliang Huang, 2010. "Optimal control of a production‐inventory system with both backorders and lost sales," Naval Research Logistics (NRL), John Wiley & Sons, vol. 57(3), pages 252-265, April.
    12. van Jaarsveld, W.L. & Dekker, R., 2009. "Finding optimal policies in the (S - 1, S ) lost sales inventory model with multiple demand classes," Econometric Institute Research Papers EI 2009-14, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    13. P. Escalona & F. Ordóñez & I. Kauak, 2017. "Critical level rationing in inventory systems with continuously distributed demand," OR Spectrum: Quantitative Approaches in Management, Springer;Gesellschaft für Operations Research e.V., vol. 39(1), pages 273-301, January.
    14. Barut, M. & Sridharan, V, 2004. "Design and evaluation of a dynamic capacity apportionment procedure," European Journal of Operational Research, Elsevier, vol. 155(1), pages 112-133, May.
    15. Bing Lin & Shaoxiang Chen & Yi Feng & Jianjun Xu, 2018. "The Joint Stock and Capacity Rationings of a Make-To-Stock System with Flexible Demand," Asia-Pacific Journal of Operational Research (APJOR), World Scientific Publishing Co. Pte. Ltd., vol. 35(01), pages 1-27, February.
    16. Huang, Boray & Wu, Andy, 2017. "Reduce shortage with self-reservation policy for a manufacturer paying both fixed and variable stockout expenditure," European Journal of Operational Research, Elsevier, vol. 262(3), pages 944-953.
    17. Hossein Abouee-Mehrizi & Barış Balcıoğlu & Opher Baron, 2012. "Strategies for a Centralized Single Product Multiclass M/G/ 1 Make-to-Stock Queue," Operations Research, INFORMS, vol. 60(4), pages 803-812, August.
    18. Paul Zipkin, 2008. "On the Structure of Lost-Sales Inventory Models," Operations Research, INFORMS, vol. 56(4), pages 937-944, August.
    19. ElHafsi, Mohsen & Camus, Herve & Craye, Etienne, 2010. "Managing an integrated production inventory system with information on the production and demand status and multiple non-unitary demand classes," European Journal of Operational Research, Elsevier, vol. 207(2), pages 986-1001, December.
    20. Robert A. Shumsky & Fuqiang Zhang, 2009. "Dynamic Capacity Management with Substitution," Operations Research, INFORMS, vol. 57(3), pages 671-684, June.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:proeco:v:131:y:2011:i:2:p:663-673. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/ijpe .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.