Impact of inventory inaccuracy on service-level quality of a multiproduct production line with product priorities

Daniel Thiel (), Vincent Hovelaque and Thi Le Hoa Vo ()
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Thi Le Hoa Vo: CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique

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Abstract: This article focus on the behaviour of a multi-product batch production line with fixed capacity which is scheduled according to inaccurate inventories (IRI). We assume an unlimited supply of raw materials and a constant demand for the different finished goods. The ordering policy of this production line is based on a (Q,R) continuous review, lost-sales inventory model and on given priority for each product using the same production line. Simulation modelling is proposed to investigate the relationship between the quality of service, safety stock and inventory inaccuracy under demand variations for each product. It is shown that the service-level quality is a non-monotone function of the inaccuracy rate, i.e. the service-level quality increases twice up to an IRI's level and decreases after. This unusual phenomenon has been observed which goes against certain empirical practices in the SMEs that safety stock is only necessary for certain intervals of data inaccuracy rate.

Keywords: Multi-product production line; continuous review inventory system; inventory inaccuracy; continuous model; discrete-time simulation.; discrete-time simulation (search for similar items in EconPapers)
Date: 2010-05
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Published in 8th International Conference of Modeling and Simulation - MOSIM'10 "Evaluation and optimization of innovative production systems of goods and services", May 2010, Hammamet, Tunisia. 7 p

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-00517496

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