General rules for seasonal demand

A fundamental problem for make-to-stock producers of seasonally demanded goods is the allocation of limited production capacity. Three important decisions must be made: (I) how early in the low demand season to product at full capacity in anticipation of high demand later, (2) the product mix to manufacture when producing in anticipation of later demand, and (3) when capacity is insufficient to make all that is desired, how to allocate capacity among products. Here, simple rules are generated for solving these problems by analyzing optimal policies.