Production, Manufacturing and LogisticsCost-effective inventory control in a value-added manufacturing system☆
Section snippets
Introduction and literature review
We consider a distributed manufacturing system that consists of two production stages (Fig. 1). The first production stage produces a common important component with limited capacity, and the second stage is a differentiation stage that consists of several stations which produce different finished products, taking the output of first stage and other possible components as their raw materials. External demands for those finished products follow different stochastic processes, with different
Problem description
The two-stage distributed manufacturing system (Fig. 1) studied in this paper consists of production nodes (facilities), with node 0 in stage 0 and nodes in stage 1. Each node in the system consists of three parts, an input buffer, a server and an output store. Node 0 takes raw materials from external resource, processes them, and unloads them as WIP to its output store. Other nodes in the system take the WIP as raw materials and deliver to their own output stores after processing.
Performance evaluation of the system with any given base-stock setting R
Because of the complexity of the simultaneous consideration of inventory control and queueing, the exact evaluation of this system is very difficult, if not impossible. We will extend the inventory-queue decomposition method developed for serial system by Liu et al. [11] to this distributed system. Let be the job queue length at node be the inventory holding cost of product i per time unit, . Let TC be the expected total inventory holding cost per time unit. Then
The optimal inventory setting for any given service level requirement
Having obtained the approximation method for performance evaluation for any given base-stock setting, this section is dedicated to finding the optimal base-stock levels, , to meet any given service level requirement , at minimum inventory cost. Recall that, when all characteristics other than base-stock levels are fixed in this system, is a function of and is determined by only. For any , since distribution of is determined only by
Numerical examples and managerial insights
We consider a two-stage split system with and use it to investigate the relationships of optimal total cost with other system attributes.
Conclusion
In this paper, we propose a simple yet accurate approximation method to study the two-stage split system, with only one server at every station operating under base-stock inventory control policy. We adopt the common used “expected total inventory cost” and “fill rate” to measure the performance of the system. The former is used to measure the system cost, and the later is used to measure the customer service level. By establishing some monotone properties about inventory cost and fill rate, we
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Optimal production-inventory policy for an integrated multi-stage supply chain with time-varying demand
2016, European Journal of Operational ResearchCitation Excerpt :The global minimum total operational cost is computed in polynomial time. A conventional assumption for many models in previous studies is that the holding cost rates increase as the material/product flows down the supply chain(Glock, 2012; Kaminsky & Simchi-levi, 2003; Kim & Glock, 2013; Lee, 2005; Liu & Lian, 2009; Zhao, Wu, & Yuan, 2016) because the product increases in value as it moves down the supply chain. However, some studies show that this is not true in several industries, such as the aircraft, automotive, personal computer and retailer supply chains with consignment stock policies (Braglia & Zavanella, 2003; Chen, Lin, & Cheng, 2010; Diabat, 2014; Valentini & Zavanella, 2003; Verma, Chakraborty, & Chatterjee, 2014; Yi & Sarker, 2014).
Optimal integer-ratio inventory coordination policy for an integrated multi-stage supply chain
2016, Applied Mathematical ModellingCitation Excerpt :Chen [17] proposed a stationary integer inventory policy in a multi-echelon inventory system with the assumptions of an infinite production rate and no transportation. In production-inventory-distribution systems, the existing literature mainly focuses on the analysis of two-stage supply chains without considering transportation [18–24]. Goyal [25] analyzed a two-stage supply chain consisting a single-vendor single-buyer with an infinite production rate.
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Both authors are supported by University of Macau through a Grant RG052/04-05S/LZT/FBA.