A Capacity Constrained Production-Inventory System with Stochastic Demand and Production Times

• This paper considers a simple model of a capacity constrained production-inventory system with Poisson demand. The system is controlled by an S policy. The production time for a unit is modelled as a gamma distributed stochastic variable. Using M/G/1 queuing theory it is very easy to evaluate holding and backorder costs and optimise the ordering policy. The suggested model may be useful when evaluating investments in production.

Subject headings

TEKNIK OCH TEKNOLOGIER  -- Samhällsbyggnadsteknik -- Transportteknik och logistik (hsv//swe)

ENGINEERING AND TECHNOLOGY  -- Civil Engineering -- Transport Systems and Logistics (hsv//eng)

Keyword

stochastic

production-inventory management

capacity constrained

Publication and Content Type

art (subject category)

ref (subject category)