Operating Characteristics of a Simple Production, Inventory-Control Model

D. P. Gaver
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D. P. Gaver: Department of Mathematics, Westinghouse Research Laboratories, Pittsburgh, Pennsylvania

Operations Research, 1961, vol. 9, issue 5, 635-649

Abstract: Queuing theory is adapted to study the coordination of a continuous-level production rate with a base-stock level inventory policy, where the latter is depleted by a particular random demand process. Figures of merit for the combined production, inventory system (such as stock-out probability and expected demand delay, average inventory level, and production idleness probability) are given in terms of demand parameters, production rate, and maximum stock level. Costs are discussed, and a criteria is given for deciding when the stocking of inventory is economically desirable. Improvements in the model are proposed.

Date: 1961
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