Abstract

In a multi-stage production/inventory system, customer service level is a function of the service levels at individual stages. The objective of a multi-stage system can be defined in terms of determining the stage-specific service levels, which minimize the total cost of the system subject to achieving a desired customer service level. The literature available so far discusses the service level perspective of multi-stage systems under the continuous review and periodic review policy. In this paper, we consider systems operating under the base stock policy, and derive service level relationships in multi-stage serial and assembly systems. First, we develop models for a two-stage serial system, and illustrate the models with the help of a numerical example. Finally, we propose an extension of the models for multi-stage serial and assembly systems.

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