Management Science and Information Systems' Seminar
Topic :Managing Stochastic Inventory Systems with Scarce ResourcesSpeaker:Rowan Wang
Affiliation:Singapore Management University (SMU)
Time:Monday,13 Oct. 14:00-17:00pm
Location:Room K01 Guanghua Building 2
Abstract:We consider the problem of managing production in a production-inventory system where a ?rm is subject to an allowance (a limit) on either the amount of input it can use or the amount of output it can produce over a speci?ed compliance period. Examples of such settings are numerous and include those where limits are placed on the use of scarce natural resources as input or on the amount of waste or harmful pollution generated by production. We formulate the problem as a stochastic dynamic program with a two-dimensional state space: on-hand inventory level and remaining allowance. To simplify the analysis, we consider an extended state-space version of the problem and show that this modi?ed version of the problem reduces to a one-dimensional problem. We show the optimal policy for this modi?ed version and then use it to characterize the structure of the optimal policy for the original problem. We draw several managerial insights. In particular, we show that it is possible to signi?cantly reduce the allowance amount without signi?cantly increasing cost.
Bio: Rowan Wang is an Assistant Professor of Operations Management in the Lee Kong Chain School of Business at the Singapore Management University (SMU). Rowan’s research inter?ests include supply chain management, manufacturing and service operations, production and inventory systems, and queueing systems. His work has been published in Manufacturing & Service Operations Management.
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