Analysis of a Forecasting-Production-Inventory System with Stationary Demand

@article{Toktay2001AnalysisOA,
  title={Analysis of a Forecasting-Production-Inventory System with Stationary Demand},
  author={L. Beril Toktay and Lawrence M. Wein},
  journal={Manag. Sci.},
  year={2001},
  volume={47},
  pages={1268-1281}
}
We consider a production stage that produces a single item in a make-to-stock manner. Demand for finished goods is stationary. In each time period, an updated vector of demand forecasts over the forecast horizon becomes available for use in production decisions. We model the sequence of forecast update vectors using the Martingale model of forecast evolution developed by Graves et al. (1986, 1998) and Heath and Jackson (1994). The production stage is modeled as a single-server, discrete-time… 

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