Zero-Inventory Conditions For a Two-Part-Type Make-to-Stock

We consider the dynamic scheduling of a two-part-type make-tostock production system using the model of Wein [12]. Exogenous demand for each part type is met from finished goods inventory; unmet demand is backordered. The control policy determines which pa

Zero-InventoryConditionsForaTwo-Part-TypeMake-to-Stock

ProductionSystem

MichaelH.Veatch FrancisdeV´ericourt

October9,2002

Abstract

Weconsiderthedynamicschedulingofatwo-part-typemake-to-stockproductionsystemusingthemodelofWein[12].Exogenousdemandforeachparttypeismetfrom nishedgoodsinventory;un-metdemandisbackordered.Thecontrolpolicydetermineswhichparttype,ifany,toproduceateachmoment;complete exibilityisassumed.Theobjectiveistominimizeaverageholdingandbackordercosts.Forexponentiallydistributedinterarrivalandproductiontimes,necessaryandsu cientconditionsarefoundforazero-inventorypol-icytobeoptimal.Thisresultindicatestheeconomicandproduc-tionconditionsunderwhichasimplemake-to-ordercontrolisoptimal.Weakerresultsaregivenforthecaseofgeneralproductiontimes.KeyWords:Make-to-StockQueue;HedgingPoints;Just-in-Time1Introduction

Safetystockservesavitalroleinbu eringagainstsupplyanddemandun-certaintyinproductionsystems.EveninaleanmanufacturingenvironmentDepartmentofMathematics,GordonCollege,Wenham,MA01984,veatch@gordon.edu FuquaSchoolofBusiness,DukeUniversity,Durham,NC27708,fdv1@duke.edu

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