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

Author

Listed:
  • Z. Jemai

    (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec)

  • F. Karaesmen

    (Department of Industrial Engineering - Koç University)

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

Suggested Citation

  • Z. Jemai & F. Karaesmen, 2005. "The influence of demand variability on the performance of a make-to-stock queue," Post-Print hal-00126137, HAL.
    • Handle: RePEc:hal:journl:hal-00126137
    DOI: 10.1016/j.ejor.2003.06.042
    Note: View the original document on HAL open archive server: https://hal.science/hal-00126137
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    Citations

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    Cited by:

    1. Cheung, Ki Ling & Song, Jing-Sheng & Zhang, Yue, 2017. "Cost reduction through operations reversal," European Journal of Operational Research, Elsevier, vol. 259(1), pages 100-112.
    2. Boute, Robert N. & Disney, Stephen M. & Lambrecht, Marc R. & Houdt, Benny Van, 2014. "Coordinating lead times and safety stocks under autocorrelated demand," European Journal of Operational Research, Elsevier, vol. 232(1), pages 52-63.
    3. Jing-Sheng Song & Hanqin Zhang & Yumei Hou & Mingzheng Wang, 2010. "The Effect of Lead Time and Demand Uncertainties in ( r, q ) Inventory Systems," Operations Research, INFORMS, vol. 58(1), pages 68-80, February.
    4. Stark, Oded & Budzinski, Wiktor & Kosiorowski, Grzegorz, 2019. "Switching queues, cultural conventions, and social welfare," European Journal of Operational Research, Elsevier, vol. 278(3), pages 837-844.
    5. Fleischhacker, Adam J. & Fok, Pak-Wing, 2015. "On the relationship between entropy, demand uncertainty, and expected loss," European Journal of Operational Research, Elsevier, vol. 245(2), pages 623-628.
    6. Awi Federgruen & Min Wang, 2013. "Monotonicity properties of a class of stochastic inventory systems," Annals of Operations Research, Springer, vol. 208(1), pages 155-186, September.
    7. Sanajian, Nima & BalcIog[small tilde]lu, BarIs, 2009. "The impact of production time variability on make-to-stock queue performance," European Journal of Operational Research, Elsevier, vol. 194(3), pages 847-855, May.
    8. Huy Truong Quang & Yoshinori Hara, 2019. "Managing risks and system performance in supply network: a conceptual framework," International Journal of Logistics Systems and Management, Inderscience Enterprises Ltd, vol. 32(2), pages 245-271.
    9. Li, Na & Zhang, Mike Tao & Deng, Shiming & Lee, Zu-Hsu & Zhang, Lawrence & Zheng, Li, 2007. "Single-station performance evaluation and improvement in semiconductor manufacturing: A graphical approach," International Journal of Production Economics, Elsevier, vol. 107(2), pages 397-403, June.
    10. Robert N. Boute & Marc R. Lambrecht & Benny Van Houdt, 2007. "Performance evaluation of a production/inventory system with periodic review and endogenous lead times," Naval Research Logistics (NRL), John Wiley & Sons, vol. 54(4), pages 462-473, June.
    11. Ewing, Bradley T. & Thompson, Mark A., 2008. "Industrial production, volatility, and the supply chain," International Journal of Production Economics, Elsevier, vol. 115(2), pages 553-558, October.
    12. Noblesse, Ann M. & Boute, Robert N. & Lambrecht, Marc R. & Van Houdt, Benny, 2014. "Lot sizing and lead time decisions in production/inventory systems," International Journal of Production Economics, Elsevier, vol. 155(C), pages 351-360.
    13. Apurva Jain, 2006. "Priority and dynamic scheduling in a make‐to‐stock queue with hyperexponential demand," Naval Research Logistics (NRL), John Wiley & Sons, vol. 53(5), pages 363-382, August.
    14. Nima Manafzadeh Dizbin & Barış Tan, 2019. "Modelling and analysis of the impact of correlated inter-event data on production control using Markovian arrival processes," Flexible Services and Manufacturing Journal, Springer, vol. 31(4), pages 1042-1076, December.
    15. Qi Feng & J. George Shanthikumar, 2022. "Applications of Stochastic Orders and Stochastic Functions in Inventory and Pricing Problems," Production and Operations Management, Production and Operations Management Society, vol. 31(4), pages 1433-1453, April.

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