A multi-stage production inventory system,including service time

The basic objective in this paper is to bring down inventory carrying cost, in a multistage production inventory system, by incorporating the idea of service time in the model. The paper considers models with two types of information flow: the serial information flow, in which the inventories at each stage are measured against, orders placed by the following stage, and the parallel information flow, in which they are measured against customer orders materializing at the finished goods stage.

The optimization involved, considering the service times, smoothing of the production rate, etc., would serve to specify which points in the manufacturing process should be inventory points and which points should not. Also, it determines how big should the in-process inventories be for maximum operating efficiency.