Joint optimisation of capacity and safety stock allocation
Stefan Woerner,
Marco Laumanns and
Stephan M. Wagner
International Journal of Production Research, 2018, vol. 56, issue 13, 4612-4628
Abstract:
We study the joint optimisation of capacity and safety stock allocation in assembly systems. Particularly, we consider capacitated systems with base-stock policies and periodic review. Capacity allocation is restricted by budget constraints, which can connect multiple systems. Our objective is to minimise overall inventory holding costs while satisfying service level as well as budget constraints. We propose an algorithm to jointly approximate optimal capacity allocation and base-stock levels. To this end, we introduce a set of convex approximations for this non-convex optimisation problem. In order to solve the resulting convex programmes, we analytically compute sample path derivatives via infinitesimal perturbation analysis. By iteratively adapting the approximations, we achieve good capacity allocations and base-stock levels for the original problem. Furthermore, we introduce a heuristic to allocate capacity, which originates from link capacity allocation in communication networks and use it as a benchmark. The algorithm is applied to small illustrative examples as well as cases motivated by the semiconductor manufacturing process at IBM Systems. It turns out that particularly for high utilisation levels, our algorithm can achieve significant improvements compared to the capacity allocation heuristic.
Date: 2018
References: Add references at CitEc
Citations: View citations in EconPapers (3)
Downloads: (external link)
http://hdl.handle.net/10.1080/00207543.2017.1380323 (text/html)
Access to full text is restricted to subscribers.
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:taf:tprsxx:v:56:y:2018:i:13:p:4612-4628
Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/TPRS20
DOI: 10.1080/00207543.2017.1380323
Access Statistics for this article
International Journal of Production Research is currently edited by Professor A. Dolgui
More articles in International Journal of Production Research from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().