Optimal Joint Inventory and Transshipment Control Under Uncertain Capacity

@article{Hu2005OptimalJI,
  title={Optimal Joint Inventory and Transshipment Control Under Uncertain Capacity},
  author={Xinxin Hu and Izak Duenyas and Roman Kapuściński},
  journal={Oper. Res.},
  year={2005},
  volume={56},
  pages={881-897}
}
In this paper, we address the optimal joint control of inventory and transshipment for a firm that produces in two locations and faces capacity uncertainty. Capacity uncertainty (e.g., due to downtime, quality problems, yield, etc.) is a common feature of many production systems, but its effects have not been explored in the context of a firm that has multiple production facilities. We first characterize the optimal production and transshipment policies and show that uncertain capacity leads… 

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