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Assessing the Benefits of Different Stock-Allocation Policies for a Make-to-Stock Production System

Fuqua School of Business, Duke University, Durham, North Carolina 27708
Laboratoire Productique Logistique, École Centrale Paris, Grande Voie des Vignes, 92295 Chatenay-Malabry Cedex, France
Laboratoire Productique Logistique, École Centrale Paris, Grande Voie des Vignes, 92295 Chatenay-Malabry Cedex, France
fdv1{at}mail.duke.edu
fikri{at}pl.ecp.fr
dallery{at}pl.ecp.fr

We consider a manufacturing facility that produces a single item that is demanded by several different classes of customers. The inventory-related cost performance of such a system can be improved by effective allocation of production and inventories. We obtain the optimal parameters for three easily implementable allocation policies. Our results cover the case of linear backorder costs as well as fill-rate constraints. We compare the optimal performance of these control policies to gain insights into the benefits of different production and stock-allocation rules.

Key Words: Inventory/Production; Optimal Policies; Stock Allocation; Queues; Make-to-Stock System
History: Received: December 31, 1999;

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