Loading...
Lot sizing and lead time decisions in production/inventory systems
Noblesse, Ann Boute, Robert Lambrecht, Marc Van Houdt, Benny
Noblesse, Ann
Boute, Robert
Lambrecht, Marc
Van Houdt, Benny
Citations
Altmetric:
Publication Type
Journal article with impact factor
Editor
Supervisor
Publication Year
2014
Journal
International Journal of Production Economics
Book
Publication Volume
155
Publication Issue
September
Publication Begin page
351
Publication End page
360
Publication NUmber of pages
Collections
Abstract
Traditionally, lot sizing decisions in inventory management trade-off the cost of placing orders against the cost of holding inventory. However, when these lot sizes are to be produced in a finite capacity production/inventory system, the lot size has an important impact on the lead times, which in turn determine inventory levels (and costs). In this paper we study the lot sizing decision in a production/inventory setting, where lead times are determined by a queueing model that is linked endogenously to the orders placed by the inventory model. Assuming a continuous review (s, S) inventory policy, we develop a procedure to obtain the distribution of lead times and the distribution of inventory levels, when lead times are endogenously determined by the inventory model. This procedure allows to determine the optimal inventory parameters within the class of (s, S) policies that minimize the expected ordering and inventory related costs over time. We numerically show that ignoring the endogeneity of lead times may lead to inappropriate lot sizing decisions and significantly higher costs. This cost discrepancy is very outspoken if the lot size based on the economic order quantity deviates significantly from desirable production lot sizes. In these cases, the endogenous treatment of lead times is of particular importance.
Research Projects
Organizational Units
Journal Issue
Keywords
Production/inventory System, Lot Sizing, Markov Chain Analysis