Inventory planning of supply chains by linking production authorization strategy to queueing models

Abstract

A methodology for supply chain inventory analysis and optimization is presented by linking production authorization (PA) strategy to queueing models. For modelling issue, an integrated framework is provided. This framework regards a supply chain as a network of stores, which are considered as single-stage manufacturing facilities. The interdependencies between supply chain components can be captured by this framework. For analysis issue, first, a queueing model that incorporates production authorization strategy is developed for each store. Second, a network of inventory-queue models for entire supply network with inventory control at all stores is developed. Furthermore, an optimization model is introduced to improve the performance of the entire supply chain. This paper extends the previous work on the supply network model with base-stock control and service requirements. Instead of one-for-one base stock policy, batch-ordering policy and lot-sizing problems are considered. To determine the replenishment lead times of items at the stores, a fixed-batch target-level production authorization mechanism is employed to explicitly obtain performance measures of the supply chain queueing model. The validity of the proposed model is illustrated by comparing the results from the analytical performance evaluation model and those obtained from the simulation study.

Keywords:

• inventory planning
• supply chain
• production authorization strategy
• queueing model

MING DONG received PhD in Industrial Engineering from Virginia Polytechnic Institute and State University in 2001. He also holds a BS degree in Mechanical Engineering, and obtained MS and PhD in Mechanical Engineering from Tianjin University in 1994 and 1997, respectively. His research interests are in supply chain management, modelling and analysis of logistics systems, production planning and scheduling, design and analysis of flexible manufacturing systems, and enterprise integration. He is a member of IIE, SME and INFORMS. He has published several papers in various journals and conferences.