(A) production smoothing model for dynamic demands

Abstract

This thesis considers a production smoothing problem with known but dynamic demands, where both the production and inventory costs are concave, and the cost of changing period-to-period production levels is, however, piecewise concave. The problem is analyzed in both the nonbacklogging and backlogging cases. The model is similar to that discussed by Zangwill, except for considering an arbitrary demand structure. The demand structure makes the characterization of extreme point plans more complicated than those of commonly-considered nondecreasing demands. The structure of an optimal solution is newly characterized, based upon which a solution algorithm is proposed in a dynamic programming approach. The algorithm is illustrated with a numerical example.