Optimal Control Of The Continucous Review Inventory System With Setup Cost

Inventory control is for the purpose of minimizing the cost by means of balancing inventory level and market requirement. Meanwhile, it determines and adjusts the types and quantities of inventory items in order to prevent the excess and lack of productions and finally to keep an optimal inventory level. How to find the best inventory control strategy is of vital importance to enterprises which need to control the inventory in a reasonable level on the one hand and to reduce inventory cost and loss on sale on the other hand.According to the inventory problem on continuous review, this thesis assumes that the working system not only had a fixed setup cost but also had a limited production capacity. On the premise of the above two assumptions, this paper will discuss the inventory control problem in the following aspects:In chapter 1, we introduce the background for selecting this topic, the research status on inventory control and the purpose and significance of the research. In addition, the content and structure of this paper is also briefly described.In chapter 2, we explore a continuous review inventory control system with setup cost. In this system, it is supposed that the demand for the product follows a Poisson process and the production time follows an exponential distribution. We consider the case of backlog. In the meantime, the prices of the products remain the same. When the machine is on, it would continue to produce. This paper just gives the optimal inventory control strategy according of the system and proves the global optimality of this strategy.In chapter 3, we research a similar continuous review inventory control system in accordance with the content in chapter 2. The difference is the case of this chapter is lost-sales. If a demand is not fulfilled from stock, it will be lost. In like manner, the paper also gives the according optimal inventory control strategy, in order to control the productive process dynamically and finally to maximize the long-term average profit.In chapter 4, we focus on a continuous review inventory control system with different sale price. When the system is turn-on or turn-off, the products can adopt two distinguished sale prices (high price and low price). With high inventory level, the products will be sold at low price. On the contrary, with low inventory level, the products will be sold at high price. For the same purpose, this chapter also proposes the optimal inventory/production control strategy and price- changing-policy so as to maximize the long-term average profit.In chapter 5, all the work done in this paper has been summarized and the research in the future is previewed.