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http://dx.doi.org/10.7232/JKIIE.2012.38.2.089

Joint Batch Production and Inventory Rationing Control in a Two-Station Serial Production System  

Kim, Eun-Gab (College of Business Administration Ewha Womans University)
Publication Information
Journal of Korean Institute of Industrial Engineers / v.38, no.2, 2012 , pp. 89-97 More about this Journal
Abstract
This paper considers a manufacturer with a two-station make-to-stock and make-to-order serial production system. The MTS facility produces a single type of component and provides components for the MTO facility that produces customized products. In addition to the internal demand from the MTO facility, the MTS facility faces demands from the spot market with the option of to accept or reject each incoming demand. This paper addresses a joint component inventory rationing and batch production control which maximizes the manufacturer's profit. Using the Markov decision process model, we investigate the structural properties of the optimal inventory rationing and batch production policy, and present two types of heuristics. We implement a numerical experiment to compare the performance of the optimal and heuristic policies and a simulation study to examine the impact of the stochastic process variability on the inventory rationing and batch production control.
Keywords
Inventory Rationing; Batch Production; Two-Station Serial System; Stochastic Process Variability; Simulation; Make-to-Stock/Make-to-Order;
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