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Cost-effective inventory control in a value-added manufacturing system

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  • Liu, Xiaoming
  • Lian, Zhaotong

Abstract

This paper considers the cost-effective inventory control of work-in-process (WIP) and finished products in a two-stage distributed manufacturing system. The first stage produces a common WIP, and the second stage consists of several production sites that produce differentiated products with different capacity and service level requirements. The unit inventory holding cost is higher at the second stage. This paper first uses a network of inventory-queue model to evaluate the inventory cost and service level achievable for given inventory control policy, and then derives a very simple algorithm to find the optimal inventory control policy that minimizes the overall inventory holding cost and satisfies the given service level requirements. Some managerial insights are obtained through numerical examples.

Suggested Citation

  • Liu, Xiaoming & Lian, Zhaotong, 2009. "Cost-effective inventory control in a value-added manufacturing system," European Journal of Operational Research, Elsevier, vol. 196(2), pages 534-543, July.
    • Handle: RePEc:eee:ejores:v:196:y:2009:i:2:p:534-543
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    References listed on IDEAS

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    Cited by:

    1. Mohammad Alaghebandha & Vahid Hajipour, 2015. "A soft computing-based approach to optimise queuing-inventory control problem," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(6), pages 1113-1130, April.
    2. Wu, Kan & Yuan, Xue-Ming, 2016. "Optimal production-inventory policy for an integrated multi-stage supply chain with time-varying demandAuthor-Name: Zhao, Shi Tao," European Journal of Operational Research, Elsevier, vol. 255(2), pages 364-379.
    3. Song-Kyoo Kim & Chan Yeob Yeun, 2019. "A Versatile Queuing System For Sharing Economy Platform Operations," Mathematics, MDPI, vol. 7(11), pages 1-14, October.
    4. Shashi & Rajwinder Singh & Amir Shabani, 2017. "Value‐Adding Practices in Food Supply Chain: Evidence from Indian Food Industry," Agribusiness, John Wiley & Sons, Ltd., vol. 33(1), pages 116-130, January.

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