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Optimal production-inventory policy for make-to-order versus make-to-stock based on the M/Er/1 queuing model |
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| Authors: | Hiroshi Ohta Tomoyuki Hirota Abdur Rahim |
| Affiliation: | (1) Faculty of Business Administration and Information, Setsunan University, Neyagawa, Osaka 572-8508, Japan;(2) Department of Industrial Engineering, Graduate School of Engineering, Osaka Prefecture University, Sakai, Osaka 599-8531, Japan;(3) Faculty of Business Administration, University of New Brunswick, Fredericton, N.B., E3B 5A3, Canada |
| Abstract: | This paper analyzes a multi-product production / inventory system where demands for each item arrive according to a Poisson process and the production time for each product has an Erlang distribution. The paper proposes an optimality condition that specifies whether each product should be produced make-to-stock or make-to-order. In the event a product should be produced make-to-stock, an approach for computing the optimal base-stock level is proposed. Numerical examples are given for illustrative purpose. |
| Keywords: | Erlang distribution Make-to-stock Make-to-order Poisson process Production/inventory system |
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