Optimizing service-level and relevant cost for a stochastic multi-item cyclic production system

Herbert Jodlbauer and Sonja Reitner

International Journal of Production Economics, 2012, vol. 136, issue 2, 306-317

Abstract: A multi-item make-to-order production system in a stochastic environment is analyzed. Assuming a common cycle production approach, the impact of safety stock, cycle time, demand, processing time and setup time on service-level and total relevant cost (holding, setup and backorder cost) is determined. To illustrate this relationship a trajectory for the service-level with respect to the relevant cost (holding and setup) is presented. Furthermore algorithms to calculate the cycle time which leads to maximum service-level at constant safety stock and to calculate the pair cycle time and safety stock which minimize total relevant cost are introduced.

Keywords: Cyclic production system; Safety stocks; Service-level; Inventory cost; Setup cost (search for similar items in EconPapers)
Date: 2012
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Citations: View citations in EconPapers (7)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:136:y:2012:i:2:p:306-317

DOI: 10.1016/j.ijpe.2011.12.015

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