Optimal control of price and production in an assemble-to-order system

Optimal control of price and production in an assemble-to-order system

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Article ID: iaor20102856
Volume: 36
Issue: 4
Start Page Number: 506
End Page Number: 512
Publication Date: Jul 2008
Journal: Operations Research Letters
Authors: , ,
Keywords: make-to-stock, assembly
Abstract:

We study the optimal control of an assembly system that produces one assembled-to-order final product with multiple made-to-stock components and sells it at variable price. It is shown that a threshold control on component production, product price, and product orders maximizes total discounted profit over an infinite horizon.

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