Two control policies for stochastic EOQ-type models

Oded Berman, David Perry

Research output: Contribution to journalArticlepeer-review


We present the production version of two EOQ-type models in heavy traffic. The output is interpreted by random demand and the input by a deterministic production plus random returns. In the ON part of the cycle, the inventory content is a reflected Brownian motion, and in the OFF part, it is a Brownian motion with a negative drift. The ON/OFF periods generate an alternative renewal process and the content-level process is a regenerative process. Two control policies are considered. In one policy that is natural under conditions of continuous review, production is stopped when the content level in the ON period reaches a predetermined level q. In the other policy, which resembles periodic review, production is stopped when the ON time reaches a predetermined time t0.

Original languageEnglish
Pages (from-to)445-463
Number of pages19
JournalProbability in the Engineering and Informational Sciences
Issue number4
StatePublished - 2001

ASJC Scopus subject areas

  • Statistics and Probability
  • Statistics, Probability and Uncertainty
  • Management Science and Operations Research
  • Industrial and Manufacturing Engineering


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