Monotone control of queueing networks
Queueing Systems: Theory and Applications
Safety stock versus safety time in MRP controlled production systems
Management Science
Customer-order information, leadtimes, and inventories
Management Science
Dynamic Programming and Optimal Control
Dynamic Programming and Optimal Control
Markov Decision Processes: Discrete Stochastic Dynamic Programming
Markov Decision Processes: Discrete Stochastic Dynamic Programming
Market Segmentation, Advanced Demand Information, and Supply Chain Performance
Manufacturing & Service Operations Management
Optimal Stock Allocation for a Capacitated Supply System
Management Science
Integrating Replenishment Decisions with Advance Demand Information
Management Science
Advance Demand Information and Safety Capacity as a Hedge Against Demand and Capacity Uncertainty
Manufacturing & Service Operations Management
Optimal Policies for Inventory Systems with Priority Demand Classes
Operations Research
Modeling the Benefits of Sharing Future Demand Information
Operations Research
Inventory Control with Limited Capacity and Advance Demand Information
Operations Research
Capacity Rationing in Stochastic Rental Systems with Advance Demand Information
Operations Research
Dynamic control of a single-server system with abandonments
Queueing Systems: Theory and Applications
Manufacturing & Service Operations Management
Stochastic models for the coordinated production and shipment problem in a supply chain
Computers and Industrial Engineering
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We consider a make-to-stock supplier that operates a production facility with limited capacity. The supplier receives orders from customers belonging to several demand classes. Some of the customer classes share advance demand information with the supplier by announcing their orders ahead of their due date. However, this advance demand information is not perfect because the customer may decide to order prior to or later than the expected due date or may decide to cancel the order altogether. Customer classes vary in their demand rates, expected due dates, cancellation probabilities, and shortage costs. The supplier must decide when to produce and, whenever an order becomes due, whether or not to satisfy it from on-hand inventory. Hence, the supplier is faced with a joint production-control and inventory-allocation problem. We formulate the problem as a Markov decision process and characterize the structure of the optimal policy. We show that the optimal production policy is a state-dependent base-stock policy with a base-stock level that is nondecreasing in the number of announced orders. We show that the optimal inventory-allocation policy is a state-dependent multilevel rationing policy, with the rationing level for each class nondecreasing in the number of announced orders (regardless of whether the class provides advance information). From numerical results, we obtain several insights into the value of advance demand information for both supplier and customers.