Control of M/Cox-2/s make-to-stock systems

Abstract

This study considers a make-to-stock production system with multiple identicalparallel servers, fixed production start-up costs and lost sales. Processing times are assumed to be two-phase Coxian random variables that allows us to model thesystems having rework or remanufacturing operations. First, the dynamicprogramming formulation is developed and the structure of the optimal productionpolicy is characterized. Due to the highly dynamic nature of the optimal policy, asa second contribution we propose an easy-to-apply production policy. Theproposed policy makes use of the dynamic state information and controlled byonly two parameters. We test the performance of the proposed policy at severalinstances and reveal that it is near optimal. We also assess the value of dynamicstate information in general by comparing the proposed policy with the wellknownstatic inventory position based policy.