Most of the existing production planning models deal with the homogeneous demand, i.e., a single demand class with identical characteristics. In many real cases, however, there are different customer groups, and the existence of different characteristics among the customer groups may greatly affect the production decisions.
The primary purpose of this thesis is to investigate dynamic production planning models with two demand classes, say, ordinary and special customers, which have different priorities, sales prices, and shortage penalties.
Based on these two customer classes, deterministic and stochastic multi-period multi-product models are developed, which are applied to a copy machine company in Korea.
The results show that inventory and production rates in each period are highly dependent upon special customer's demand pattern, i.e., the optimal policy is to keep suitably high level of inventory and production rates in order to avoid the unfavorable shock arising from the special customer's shortage penalty.
The results support that the different characteristics of both customer classes should be considered for better decisions in production planning.
