DETERMINATION OF THE OPTIMAL PRODUCTION OUTPUT UNDER INFORMATIONAL UNCERTAINTY OF DEMAND

Vera Bukhvalova

Andrey Petrusevich

We consider a problem of finding optimal production output when the product price is fixed and demand is not stochastic but unknown–the firm meets with informational uncertainty. We get the optimal multi-step strategy to find production output, which minimizes the expected total cost of production (including alternative costs). The case of constant rate changes in demand is considered. It is necessary to treat differently finite-step and infinite-step models. The potential of the model is illustrated on the case of the product policy in ZAO “Ford Motor Company” in 2000s.