Article ID: | iaor200044 |
Country: | United States |
Volume: | 44 |
Issue: | 7 |
Start Page Number: | 950 |
End Page Number: | 961 |
Publication Date: | Jul 1998 |
Journal: | Management Science |
Authors: | Arreola-Risa Antonio, DeCroix Gregory A. |
Keywords: | production |
We show that a modified base-stock policy is optimal for multiproduct, infinite-horizon production-inventory systems, where demand for the products is random and the products share a finite resource every period. We characterize the optimal policy for the case of homogeneous products. Because of the difficulty in computing the optimal base-stock levels for the heterogeneous case, we propose a heuristic that is simple enough for practical applications. We present numerical results that suggest that the heuristic yields near-optimal solutions.