STOCHASTIC INVENTORY OPTIMIZATION PROBLEMS UNDER PROCESS FLEXIBILITY ASSUMPTION: DYNAMIC PROGRAMMING SOLUTION

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Flexible manufacturing process provides competative advantage over rivals in high competative industries. Process Flexibility is an ability to change the volumes and range of products in one or more production facilities. Companies intagrates process flexibility into their systems by using high technology machines, educating workers or redesigning facility layouts. Although process flexibility ensures competetive advantage, it complicates inventory management due to high product volumes and ranges. This study aims to model stochastic inventory optimization problem under process flexibility assumption as a Markov Decision Process and solve the model with Dynamic Programming. Our model optimally solve four different process flexibility problem. To illustrete importance of optimal policies, optimal results compare with Deterministic Myopic Policy which represents the imperfect decisions of decision makers.

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Process Flexibility , Stochastic Inventory Optimization , Markov Decision Process , Dynamic Programming

Journal Of Economics an‎d Administrative Sciences

270

Journal Of Economics an‎d Administrative Sciences