"Everything should be made as simple as possible, but not simpler." - Albert Einstein

Seminar Announcement

Optimal Prices and Production Rate in a Closed Loop Supply
Chain with Re-manufacturing under Heavy Traffic

Arka Ghosh, Ph.D.,Deparment of Statistics, Iowa State University

Monday, October 6, 2008

4:00 p.m. 223 Weber


We consider a Markovian manufacturing network model, where new products are produced and returned products are re-manufactured. Back-orders are allowed for new-products and customers for refurbished-products are lost if inventory is empty. The manufacturer can choose the price of the refurbished-product and the rate at which new products are produced . We consider an ergodic cost-criterion which penalizes for higher values, for lost customers (of refurbished-products) and for long back-orders for new-products. We show that there is a unique choice that induces "heavy traffic" condition, under which we obtain an asymptotically optimal policy.