A Production-Inventory System with Markovian Capacity and Outsourcing Option

Authors:
Jian Yang;Xiangtong Qi;Yusen Xia
Affiliations:
-;-;-
Venue:
Operations Research
Year:
2005

Citing 0
Cited 6

Optimal Policies for Inventory Systems with Separate Delivery-Request and Order-Quantity Decisions

Operations Research
A capacitated production planning with outsourcing: a general model and its algorithm

ICIC'06 Proceedings of the 2006 international conference on Intelligent Computing - Volume Part I
Managing an Available-to-Promise Assembly System with Dynamic Short-Term Pseudo-Order Forecast

Management Science
An inventory model with capacity flexibility in the existence of advance capacity information

Decision Support Systems
Relating the multiple supply problem to quantity flexibility contracts

Operations Research Letters
Managing Inventory in Global Supply Chains Facing Port-of-Entry Disruption Risks

Transportation Science

Quantified Score

Hi-index	0.00

Visualization

Abstract

We study the optimal production-inventory-outsourcing policy for a firm with Markovian in-house production capacity that faces independent stochastic demand and has the option to outsource. We find very simple optimal policy forms under fairly reasonable assumptions. In addition, when the capacity Markov process is stochastically monotone, the policy parameters decrease in the firm's current capacity level under additional assumptions. All these results extend to the infinite-horizon and undiscounted-cost cases. We analyze comparative statics and the necessity of some technical conditions, and discuss when the outsourcing option is more valuable.