Optimal production control of a service-oriented manufacturing system with customer balking behavior

Abstract

The great challenge for service-oriented manufacturing (SOM) is how to cope with customer behavior while making decision on production planning and scheduling. In this paper, we consider a single-stage manufacturing system for SOM with impatient customers. In order to represent customer balking behavior caused by backlog, we employ a balking function, which is an arbitrary non-decreasing function of the backlog for characterizing the customer’s response to the backlog. The objective is to find the optimal production policy that minimizes the system cost. The problem is formulated as a Markov decision process. The optimal production policy is proved to be a base-stock policy. The effects of system parameters on the optimal base-stock level are analytically investigated, and the impact of customer balking behavior on the system is illustrated by numerical example in which linear balking function is employed. Numerical example shows that customer balking has a significant impact on the optimal control and the performance measures of the system under the optimal policy.