Production planning with stochastic seasonal demand and capacitated production
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We consider a production/inventory problem with stochastic seasonal demand. A scarce resource limits production in each time period, and setup time is negligible. Linear and stationary costs are assessed for production, holding inventory, and stock-outs. The calculation of optimal solutions is difficult so heuristics are used. The heuristics used in business practice are shown to cost an average of 30% above optimal policy costs. A superior heuristic is constructed utilizing an analytic approximation for optimal policies that costs an average of 2% over optimal policy costs. © 1997 Taylor & Francis Group, LLC.
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