Models for integrated production-inventory systems: steady state and cost analysis

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Authors

We consider a two-echelon production-inventory system with a central supplier connected to production systems (servers) at several locations, each with a local inventory. Demand of customers arrives at each production system according to a Poisson process and is lost if the local inventory is depleted. To satisfy a customer’s demand, a server at the production system takes exactly one unit of raw material from the associated local inventory. The central supplier manufactures raw material to replenish the local inventories, which are controlled by a continuous review base stock policy. We derive stationary distributions of joint queue length and inventory processes in explicit product form. After performing a cost analysis, we find out that the global search for the vector of optimal base stock levels can be reduced to a set of independent optimisation problems. The explicit form of the stationary distribution enables us to get additional structural insights, e.g. about monotonicity properties and stability conditions. Obtaining the product form relies on some simplifying assumptions. The results are therefore compared with simulations of a more realistic system, which supports to use it as approximation.
Original languageEnglish
JournalInternational Journal of Production Research
Volume54
Issue number20
Pages (from-to)6174-6191
Number of pages18
ISSN0020-7543
DOIs
Publication statusPublished - 17.10.2016
Externally publishedYes

Bibliographical note

Keywords: inventory control, queueing networks, supply chain dynamics, Markovian analysis, separability, product form stationary distribution

    Research areas

  • Business informatics
  • inventory control, Markovian analysis, product form stationary distribution, queueing networks, separability, supply chain dynamics

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