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

Z. Jemai (1) , F. Karaesmen (2)

1 LGI - Laboratoire Génie Industriel - EA 2606
2 Department of Industrial Engineering

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

Mots clés: production/inventory; make-to-stock; base-stock; stochastic comparisons; GI/M/1; POLICIES; COSTS; SYSTEMS; LEAD

Domaines: Gestion et management

Z. Jemai, F. Karaesmen. The influence of demand variability on the performance of a make-to-stock queue. European Journal of Operational Research, 2005, 164 (1), pp.195-205. ⟨10.1016/j.ejor.2003.06.042⟩. ⟨hal-00126137⟩