Abstract
This paper concerns the joint management problem of production control and dynamic pricing to balance the finished goods inventory and market demand in a make-to-stock manufacturing system using a long-run average profit criterion. In the system, the production rate is random, with a controllable mean rate, and the demand is Markov, with a changeable mean rate which depends on the sale price. The management issue is how to dynamically adjust the production rate and the selling price to maximise the long-run average profit. We discover that the optimal policy of dynamic pricing and production control over an infinite horizon is a matter of thresholds. An effective algorithm is suggested.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
