AbstractIn this paper we address an important problem faced in the area of production scheduling/ inventory control. We consider an item that is produced to stock. The stock buildup is gradual because of the finite nature of the production rate. In addition, a lead time of significant length exists. In the industrial example that motivated the research, there are many stages in the production process, consequently the impact of a production rate change is not felt for a considerable length of time (the lead time). Another complicating factor is that, for high yield considerations, it is advantageous to maintain the same production rate over a significant time period, known as a review interval or cycle. A decision rule is developed for determining the safety stock so as to provide a prescribed level of service, where service is defined as the fraction of demand routinely met from stock. A graphical implementation aid is shown, as well as a numerical example illustrating its use. The example demonstrates t...
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