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Optimizing service-level and relevant cost for a stochastic multi-item cyclic production system

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  • Jodlbauer, Herbert
  • Reitner, Sonja

Abstract

A multi-item make-to-order production system in a stochastic environment is analyzed. Assuming a common cycle production approach, the impact of safety stock, cycle time, demand, processing time and setup time on service-level and total relevant cost (holding, setup and backorder cost) is determined. To illustrate this relationship a trajectory for the service-level with respect to the relevant cost (holding and setup) is presented. Furthermore algorithms to calculate the cycle time which leads to maximum service-level at constant safety stock and to calculate the pair cycle time and safety stock which minimize total relevant cost are introduced.

Suggested Citation

  • Jodlbauer, Herbert & Reitner, Sonja, 2012. "Optimizing service-level and relevant cost for a stochastic multi-item cyclic production system," International Journal of Production Economics, Elsevier, vol. 136(2), pages 306-317.
    • Handle: RePEc:eee:proeco:v:136:y:2012:i:2:p:306-317
    DOI: 10.1016/j.ijpe.2011.12.015
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    4. Gonçalves, João N.C. & Sameiro Carvalho, M. & Cortez, Paulo, 2020. "Operations research models and methods for safety stock determination: A review," Operations Research Perspectives, Elsevier, vol. 7(C).
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    6. Jodlbauer, Herbert & Dehmer, Matthias & Strasser, Sonja, 2018. "A hybrid binomial inverse hypergeometric probability distribution: Theory and applications," Applied Mathematics and Computation, Elsevier, vol. 338(C), pages 44-54.
    7. Chiu, Yuan-Shyi Peter & Huang, Chao-Chih & Wu, Mei-Fang & Chang, Huei-Hsin, 2013. "Joint determination of rotation cycle time and number of shipments for a multi-item EPQ model with random defective rate," Economic Modelling, Elsevier, vol. 35(C), pages 112-117.

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