The Impact of Correlated Demands on Integrated Safety Stock Optimization in Multi-Stage Manufacturing Systems
In this paper the determination of safety stocks in multi-stage manufacturing systems with — at least partly — serial and divergent structures is considered in case of stochastic demands which are correlated both between products and also through time. It is shown that these types of correlation have contrary effects on the safety stock distribution, and that neglecting demand correlation can lead to significant deviations from the optimal buffer policy. A procedure for integrated multi-level safety stock optimization is presented which can be applied to arbitrary serial and divergent systems, even if demand is jointly correlated.
KeywordsLead Time Demand Process Safety Stock Lead Time Demand Replenishment Time
Unable to display preview. Download preview PDF.
- Graves, S.C., Safety Stocks in Manufacturing Systems in: Journal of Manufacturing and Operations Management 1 (1988): 67–101Google Scholar
- Inderfurth, K., Safety Stock Optimization in Multi-Stage Inventory Systems, in: GRUBBSTRöM, R.W. et. al. (Eds.), Production Economics: Issues and Challenges for the 90th, Elsevier, Amsterdam 1991Google Scholar
- Inderfurth, K., Combined Optimization of Safety Stocks and Processing Lead Times in Multi-Stage Production Systems, in: FANDEL, G., ZäPFEL, G., (Eds.), Modern Production Concepts: Theory and Applications, Springer, Berlin 1991Google Scholar
- Kendall, M.G., Stuart, A., The Advanced Theory of Statistics, Vol.3, 3rd ed., Charles Griffin, London 1976Google Scholar
- Orlicky, J.A., Material Requirements Planning, McGraw-Hill, New York 1975Google Scholar
- Ray, W.D., The Significance of Correlated Demands and Variable Lead Times for Stock Control Policies, in: Journal of the Operational Research Society 31 (1980): 187–190Google Scholar
- Ray, W.D., Computation of Recorder Levels when the Demands are Correlated and the Lead Time Random, in: Journal of the Operational Research Society 32 (1981): 27–34Google Scholar
- Rockafellar, R.T., Convex Analysis, Princeton University Press, Princeton 1970Google Scholar
- Schwarz, L.B. (Ed.), Multi-Level Production/Inventory Control Systems: Theory and Practice, North-Holland, Amsterdam 1981Google Scholar
- Van Donselaar, K., Material Coordination under Uncertainty, Dissertation, Eindhoven University of Technology 1989Google Scholar