Periodic Review Production Models With Variable Yield And Uncertain Demand∗

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Abstract
A periodic-review production model with variable yield (uncertain supply) and uncertain demand is formulated and investigated. First, we provide a complete analysis of the final (single) period problem. The order point turns out to be unaffected by the yield distribution, but the expected yield corresponding to optimal lot size generally does not equal the difference between the order point and initial stock. We then explore properties of the two-period problem, the solution of which is generally non-myopic. Finally, the solution structure of the n-period problem is reported.