Linking product quality and customer behavior for performance analysis and optimization of make-to-order manufacturing systems

Abstract

A queueing network model is developed for understanding the way product quality may affect the profitability of production systems, when the consumers base their future demand patterns on the quality of the products they have recently purchased. We examine a multistage make-to-order system which receives orders from regular and occasional customers, the former having a higher mean demand rate. Each outgoing item undergoes inspection and quality grading to decide whether it will be discarded as nonconforming or shipped to a customer. In the latter case, the customer who purchases the item will subsequently become a regular or occasional customer with complementary probabilities which depend on the quality level of that item. The solutions of simple test cases with dynamic programming show that the optimal policy is state-dependent, complex, and computationally intensive. A much simpler, threshold-type policy is proposed, whose performance evaluation and optimization uses closed queueing network formulas and has minimal computational requirements. Numerical results indicate that the proposed policy performs almost as well as the optimal policy.