Heavy Traffic Analysis of a Simple Closed-Loop Supply ChainStochastic Models
Publication VersionAccepted Manuscript
AbstractWe consider a closed-loop supply chain where new products are produced to order and returned products are refurbished for reselling. The solution to aprice-setting problem enforces the heavy traffic condition, under which we address the production rate control problem for two types of cost functions. Wesolve a drift-control problem for an approximate system driven by a correlated two-dimensional Brownian motion. The solutions to this system are then used to obtain asymptotically optimal control policies. We also conduct a numerical study to explore the effects of different parameters on the optimal production rates and the resulting costs.
Copyright OwnerTaylor and Francis Inc.
Citation InformationArka P. Ghosh, Sarah M. Ryan, Lizhi Wang and Ananda Weerasinghe. "Heavy Traffic Analysis of a Simple Closed-Loop Supply Chain" Stochastic Models Vol. 26 Iss. 4 (2010) p. 549 - 593
Available at: http://works.bepress.com/sarah_m_ryan/16/