Production Point Optimization for Short Life Cycle Products

Production and inventory problem has attracted a great deal of attention. This problem concerns the determination of reproduction point in the production system. And the optimal solution to the problem is the (s, S) policy with different values for each period in the time varying demand situation This study develops an optimal production policy for shot life cycle products with a declining price. Assuming that the manufacturer adopts an inventory policy with optimal production points, we propose the model based on the production cycle for replenishment. Numerical example shows that the model has better results than that with a fixed service level and fixed production point. And based on this approach, we shows the significant influence of production cycle and price remaining rate on the expected profit with sensitivity analysis.