@article{Disney2004, author = {S.M. Disney and R.W. Grubbström}, title = {Economic consequences of a production and inventory control policy}, journal = {International Journal of Production Research}, volume = {42}, number = {17}, pages = {3419-3431}, year = {2004}, publisher = {Taylor & Francis}, doi = {10.1080/00207540410001727640}, URL = {https://doi.org/10.1080/00207540410001727640}, eprint = {https://doi.org/10.1080/00207540410001727640}, abstract = {The economic performance of a generalized Order-Up-To policy is investigated in response to an Auto Regressive stochastic demand process. Focus is on the case where the physical production/distribution lead time is one period and where demand is forecasted with simple exponential smoothing. Two sets of convex piece-wise linear costs are considered. The first set is the traditional inventory holding and backlog costs. The second set of costs is piece-wise linear and increasing convex costs associated with the production order rate within and above a capacity constraint. Numerical investigations reveal that the classical Order-Up-To policy is no longer optimal when a broader range of costs is considered in the objective function. } }