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Inventory control with manufacturing lead time flexibility

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Technische Universiteit Eindhoven
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Inventory control with manufacturing lead time flexibility Ton G. de Kok Beta Working Paper series 345 BETA publicatie WP 345 (working paper) ISBN 978-90-386-2490-7 ISSN NUR 804 Eindhoven April 2011 Inventory control with manufacturing lead time flexibility Ton G. de Kok Unpublished Research Report TUE/TM/LOG November, 1998 Department of Technology Management P.O. Box 513, Pav. E4 5600 MB Eindhoven The Netherlands Phone: +31-40-2473849 Fax: +31-40-2464596 E-mail: [email protected] This paper should not be quoted or referred to without the prior written consent of the author 1 Inventory control with manufacturing lead time flexibility Ton G. de Kok Department of Technology Management Eindhoven University of Technology The Netherlands Abstract In this paper we discuss an inventory control problem where manufacturing lead times can be shortened in case short-term stockouts are foreseen. This problem occurs in many practical situations where multiple items are produced in a production department using common capacity and customer lead time for the items is positive. In that case the common capacity provides the flexibility of scheduling in production orders of items for which a stockout occurs within the customer lead time, while scheduling out production orders for items that have sufficient stock available to satisfy short-term demand. We derive expressions for the probability of a stockout and the fill rate in case such replanning is allowed. We validate the heuristic analysis of the model by comparing model results with results from a case study. We discuss the importance of measuring the frequency of replanning for the application of the model. 2 1. Introduction In this note we discuss the problem of modelling manufacturing lead time flexibility and its impact on the control of

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