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Sensitivity Analysis for a Make-to-Order Inventory-Production System with Limited Order Acceptance Level  

Kim Eungab (이화여자대학교 경영대학)
Kim Jiseung (경일대학교 경영공학과)
Publication Information
Journal of the Korean Operations Research and Management Science Society / v.30, no.2, 2005 , pp. 117-129 More about this Journal
Abstract
This paper considers a make-to-order inventory-production system in which customer orders are admitted only when the number of outstanding customer orders is below a value committed by the system. We deal with general distributions for the customer order Inter-arrival, production, and replenishment lead time processes. Monotonicities of the optimal average cost with respect to these distribution parameters are established using sample path coupling arguments. When distributions are given as an exponential one, we implement a sensitivity analysis on the optimal inventory policy and show that it has monotonicities with respect to system costs using dynamic programming.
Keywords
Monotonicity; Sample Path Coupling Argument; Dynamic Programming; Inventory Management; Sensitivity Analysis; Make-to-order;
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