Journal of Applied Probability
- J. Appl. Probab.
- Volume 52, Number 2 (2015), 473-489.
A fluid EOQ model with Markovian environment
We consider a production-inventory model operating in a stochastic environment that is modulated by a finite state continuous-time Markov chain. When the inventory level reaches zero, an order is placed from an external supplier. The costs (purchasing and holding costs) are modulated by the state at the order epoch time. Applying a matrix analytic approach, fluid flow techniques, and martingales, we develop methods to obtain explicit equations for these cost functionals in the discounted case and under the long-run average criterion. Finally, we extend the model to allow backlogging.
J. Appl. Probab., Volume 52, Number 2 (2015), 473-489.
First available in Project Euclid: 23 July 2015
Permanent link to this document
Digital Object Identifier
Mathematical Reviews number (MathSciNet)
Zentralblatt MATH identifier
Primary: 60K10: Applications (reliability, demand theory, etc.)
Secondary: 90B05: Inventory, storage, reservoirs 60J28: Applications of continuous-time Markov processes on discrete state spaces
Barron, Yonit. A fluid EOQ model with Markovian environment. J. Appl. Probab. 52 (2015), no. 2, 473--489. doi:10.1239/jap/1437658610. https://projecteuclid.org/euclid.jap/1437658610