Determination of Economic Production Policy with Dynamic Demand and Production Capacity Constraint
This paper addresses the issue of determining economic production policy for a product having time varying demand. The capacity of the production system is restricted. However, a limited number of items can be produced on overtime. The objective is to minimize the total cost of the system. The model permits the integration of both production and forecasting for planning and control. It takes into account the adjustment in production policy necessary when demand forecast errors result in shortages or surpluses.
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