Near optimal production policies for a discrete production-inventory system with stochastic demand

Abstract

This paper discusses the model of a discrete production-inventory system by assuming the production decision policy to be based on present inventory and sales forecast, Two cases have been recognized, viz. (i) constant decision parameter and (ii) time varying decision parameter. For the first case a stability analysis has been carried out and the system parameters are evaluated by using a simulation procedure, while for the second ease an optimization analysis has been made within the framework of Wiener filtering theory. In both the cases a quadratic cost functional has been minimized.