A Multi-Type Production System for Perishable Inventories

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Abstract
This paper develops a one-period model for investigating the properties of the optimal production policy for a system composed of two production processes called types A and B. These in turn produce two perishable stock items called products 1 and 2, having independent random demands and different lifetimes. Type A produces both products in amounts governed by a fixed set of production coefficients. Type B can be used only to manufacture product 2. The optimal starting inventory level is characterized for the one-period problem using the criterion of minimized expected total cost. The optimal production levels are characterized in terms of the starting inventory levels. Results show that the decision space is partitioned into four distinct regions whose boundaries are defined by a point and four hypersurfaces.

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