ADAPTING LOT-SIZING TECHNIQUES TO STOCHASTIC DEMAND THROUGH PRODUCTION SCHEDULING POLICY

Production-inventory systems that experience significant demand variat ions from period to period often use deterministic lot-sizing techniqu es to schedule production runs. If demand is uncertain, safety stock i s included to buffer against stockouts. In this paper we propose a 'du al-buffer' production scheduling policy and show that it has superior performance characteristics to the single buffer policies currently in use. The second buffer is a simple calculation based on prior work in stochastic inventory theory. Methodologically, data envelopment analy sis (DEA) is used to analyze results. This represents an unusual use o f DEA.