A FINITE HORIZON OPTIMAL POLICY PROBLEM FOR A BY-PRODUCT SYSTEM

摘要

In this paper, we study the finite horizon optimal production and allocation policy problem of a byproduct production system with downward substitution and stochastic demand. We show that a modified base stock policy is the optimal production policy for both deterministic and random yield cases. For the allocation plan, a rationing policy is optimal, while in the final period, the rationing threshold is zero.