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Two-Period Production Planning and Inventory Control Model with Demand Forecasts Updating

Author

Listed:
  • Zied Jemai

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Y. Dallery

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Ali Cheaitoua

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • Christian van Delft

    (GREGH - Groupement de Recherche et d'Etudes en Gestion à HEC - HEC Paris - Ecole des Hautes Etudes Commerciales - CNRS - Centre National de la Recherche Scientifique)

Abstract

We develop a stochastic two-period production/inventory planning model, which combines the use of information updating process with the flexibility of different delivery lead-times ordering strategy. Several decision variables are used: two orders are placed at the beginning of the first and second periods respectively and received immediately; another order is placed at the beginning of the first period and received with one period delay. The two different ordering/production modes, with zero and one period delivery lead-time, have different specific costs. The model permits to the retailer to return a certain amount of the available inventory to the supplier at the beginning of each period. Furthermore, a market information permits to update, between successive time periods, the random second period demand probability distribution. Via a dynamic programming approach, we exhibit the structure of the optimal policy, which is partially characterized by threshold levels. Then, via a numerical study, we exhibit the impact of the information quality of the proposed model.

Suggested Citation

  • Zied Jemai & Y. Dallery & Ali Cheaitoua & Christian van Delft, 2010. "Two-Period Production Planning and Inventory Control Model with Demand Forecasts Updating," Post-Print hal-01672437, HAL.
    • Handle: RePEc:hal:journl:hal-01672437
    as

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