Planned Leadtimes For Serial Production Systems

Abstract

We investigate the problem of setting planned leadtimes in serial production systems when the actual leadtimes are stochastic. The objective is to minimize the sum of inventory holding costs, rescheduling costs arising from tardiness at intermediate stages of production, and tardiness of delivery to the customer.

A single-pass algorithm is developed which finds optimal solutions. The analytical models underlying the algorithm and extensive computational experience indicate that it is never optimal to have planned leadtimes of zero when there are rescheduling costs at intermediate stages of production. This also implies that unconditional immediate dispatching is not optimal under these conditions.