Applications to Production and Inventory推荐.pdfVIP

Chapter 6 Application s t o Productio n and Inventory Applications of optimization method s t o production and inventory prob- lems dat e back at least t o th e classical EOQ(Econoniic Order Quantity) model or th e lot size formula of Harris (1913). The EOQ is essentially a static model in th e sense that th e demand is constant and only a sta- tionary solution is sought . A dynamic version of th e lot size model was analyzed by Wagner and Whitin (1958). Th e solution methodology used there was dynamic programming . An important dynamic production planning model was developed by Holt, Modigliani, Muth , and Simon (1960). In their model, referred t o as the HMMS model, they considered both production costs and inventory holding costs over time . They used calculus of variations techniques t o solve th e continuous-time version of their model . In Section 6.1 , a model of Thompson and Sethi (1980), similar t o the HMMS model, is formulated and completely solved using optimal control theory . The turnpike solution is also obtained when the horizon is infinite . In Section 6.2, th e continuous wheat trading model of Ijiri and Thompson (1970) is introduced . In thi s model a wheat speculator must buy and sell wheat in an optimal way in order t o take advantage of changes in th e price of wheat over time . Thi s model permit s short-selling of wheat . The model has been further analyzed by Norstrom (1978) with short-selling disallowed. A simple example which illustrate s his resiilts is presented in Section 6.2.4. In Section 6.3, we introduce a warehousi