Optimal policy for a mixed production system with multiple OEM and OBM products

In the process of manufacture upgrade from original equipment manufacture (OEM) to own brand manufacture (OBM), the parallel OEM and OBM strategy is an important strategic choice for many manufacturing companies. This paper considers a mixed production system under this parallel strategy. The mixed system uses the common production capacity to produce multiple OEM and OBM products for fulfilling independent demands. A profit-maximization model is proposed for the mixed production problem. The structural properties of the solution and an efficient solution method for solving the proposed model are developed. Numerical results are provided for showing the efficiency of the proposed solution method and obtaining some managerial insights.