AN INVENTORY MODEL FOR MANUFACTURING SYSTEMS WITH DELIVERY TIME GUARANTEES

This paper studies optimal (s,S) policies for production planning in o ne-machine manufacturing systems. The machine produces one type of pro duct with delivery time guarantees on the products offered to the cust omers. The inter-arrival time of the demand and the processing time fo r one unit of product are assumed to be exponentially distributed. The total delivery time (total lead time) consists of two parts: the cycl e time and the delivery time. The cycle time is the time between the a rrival of an order and the time requested product leaves the manufactu ring system. The delivery time is the time from the manufacturing syst em to the customer. We model the delivery time by a shifted exponentia l distribution Unbiased and consistent estimators are derived for this distribution. The analytical form of the steady state probability dis tribution for the inventory levels is derived. The average profit of t he system can be written in terms of the resulting probability distrib ution. Hence the optimal (s,S) policy can be obtained by varying diffe rent possible values of s and S. (C) 1998 Elsevier Science Ltd. All ri ghts reserved.