Managing Capacity and Inventory Jointly in Manufacturing Systems

@article{Bradley2002ManagingCA,
  title={Managing Capacity and Inventory Jointly in Manufacturing Systems},
  author={James R. Bradley and Peter W. Glynn},
  journal={Manag. Sci.},
  year={2002},
  volume={48},
  pages={273-288}
}
In this paper, we develop approximations that yield insight into the joint optimization of capacity and inventory,and how the optimal inventory policy varies with capacity investment in a single-product, single-station, make-to-stock manufacturing system in which inventory is managed through a base-stock policy. We allow for a correlated demand stream as we analyze our models in an asymptotic regime,in which the penalty and holding costs are small relative to the cost of capacity. Although our… 

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