Abstract
This paper analyzes a multi-product production / inventory system where demands for each item arrive according to a Poisson process and the production time for each product has an Erlang distribution. The paper proposes an optimality condition that specifies whether each product should be produced make-to-stock or make-to-order. In the event a product should be produced make-to-stock, an approach for computing the optimal base-stock level is proposed. Numerical examples are given for illustrative purpose.
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Acknowledgements
Financial assistance for this collaborative research project supported by NSERC (Natural Science and Engineering Research Council) of Canada is gratefully acknowledged. The valuable comments and helpful suggestions of two reviewers are also greatly appreciated.
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Ohta, H., Hirota, T. & Rahim, A. Optimal production-inventory policy for make-to-order versus make-to-stock based on the M/Er/1 queuing model. Int J Adv Manuf Technol 33, 36–41 (2007). https://doi.org/10.1007/s00170-006-0444-3
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DOI: https://doi.org/10.1007/s00170-006-0444-3