|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.