The influence of demand variability on the performance of a make-to-stock queue

Z. Jemai () and F. Karaesmen
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Z. Jemai: LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec
F. Karaesmen: Department of Industrial Engineering - Koç University

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Abstract: Variability, in general, has a deteriorating effect on the performance of stochastic inventory systems. In particular, previous results indicate that demand variability causes a performance degradation in terms of inventory related costs when production capacity is unlimited. In order to investigate the effects of demand variability in capacitated production settings, we analyze a make-to-stock queue with general demand arrival times operated according to a basestock policy. We show that when demand inter-arrival distributions are ordered in a stochastic sense, increased arrival time variability indeed leads to an augmentation of optimal base-stock levels and to a corresponding increase in optimal inventory related costs. We quantify these effects through several numerical examples

Keywords: production/inventory; make-to-stock; base-stock; stochastic comparisons; GI/M/1; POLICIES; COSTS; SYSTEMS; LEAD (search for similar items in EconPapers)
Date: 2005-07-01
Note: View the original document on HAL open archive server: https://hal.science/hal-00126137
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Citations: View citations in EconPapers (17)

Published in European Journal of Operational Research, 2005, 164 (1), pp.195-205. ⟨10.1016/j.ejor.2003.06.042⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-00126137

DOI: 10.1016/j.ejor.2003.06.042

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