PRODUCTION TO ORDER ON A 2 MACHINE LINE WITH RANDOM YIELDS AND RIGID DEMAND

Random yields may necessitate multiple production runs whenever demand is 'rigid'; i.e., whenever shortages are not permitted. In this paper , we extend the analysis of problems with rigid demand to a two machin e system which has an intermediate inventory of inspected units. For s uch systems, the production policy must specify, as a function of the intermediate inventory level and the remaining demand, which machine t o run next and its lot size. After showing that the optimal policy can be calculated through a series of linear programs, we use the dual fo rmulation to demonstrate that a straightforward policy improvement alg orithm will yield the optimal policy. Finally, some empirically observ ed properties of both the optimal policy and its cost function are use d to develop a simpler heuristic algorithm which performs within 1/2% of the optimal over a test bed of 180 problems.