Production planning for a prone to failures manufacturing facility with stochastic demand

The production planning of a manufacturing facility with uncertain capacity and stochastic demand is discussed. The plan is based on the hedging point policy as derived by S.B. Gershwin et al. (1985). The same policy is applied for a system that has stochastic demand and is prone to failures. The same policy can also be used to determine the size of the buffer for a system with two machines. Simulation is used to evaluate the method, since there is no analytic proof of optimality.<
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