Dynamic modeling and control of supply chain systems: A review
Computers and Operations Research
Manufacturing & Service Operations Management
Optimal production policies with multistage stochastic demand lead times
Probability in the Engineering and Informational Sciences
Capacity Rationing in Stochastic Rental Systems with Advance Demand Information
Operations Research
Journal of Intelligent Manufacturing
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Manufacturers make production decisions and carry inventory to satisfy uncertain demand. When holding and shortage costs are high, carrying inventory could be even more expensive for acapacitated production system. Recent developments in information technology and sales strategies enabled firms to acquire, collect, or induce advance demand information. We address a periodic-review, stochastic, capacitated, finite and infinite horizon production system faced by a manufacturer who has the ability to obtain advance demand information. We establish optimal policies and characterize their behavior with respect to capacity, fixed costs, advance demand information, and the planning horizon. With a numerical study, we quantify the value of advance demand information and additional capacity for specific problem instances. We illustrate how advance demand information can be a substitute for capacity and inventory.