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Sporadic and Continuous Clearing Policies for a Production/Inventory System Under an M/G Demand Process

Department of Statistics, University of Haifa, 31905 Haifa, Israel
University of Osnabrück, Fachbereich Mathematik/Informatik, 49069 Osnabrück, Germany
Department of Mathematical Sciences, Binghamton University, Binghamton, New York 13902-6000, USA
dperry{at}stat.haifa.ac.il, http://stat.haifa.ac.il/~dperry
wolfgang{at}mathematik.uni-osnabrueck.de, http://www.mathematik.uni-osnabrueck.de/staff/phpages/stadjew.html
shelly{at}math.binghamton.edu, http://www.math.binghamton.edu/shelly

A production/inventory system is filled continuously at rate 1 and satisfies demands of i.i.d. random sizes that arrive at Poisson times. For this system we consider two clearing policies. Under sporadic review, clearing takes place after a random time independent of the content process. Under continuous review, the system is cleared as soon as the inventory level reaches some pre-specified threshold. We derive explicit results for the associated expected discounted cost functionals under both types of clearing.

Key Words: production/inventory system; sporadic and continuous clearing policies
History: Received: September 8, 2003; revision received: June 21, 2004;