Optimum Production-Inventory Policy for MTO versus MTS under Transitional State Conditions Based on the M/M/1 Queuing Model

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  • M/M/1待ち行列モデルに基づく過渡状態におけるMTO対MTS最適生産-在庫政策
  • M M 1 マチ ギョウレツ モデル ニ モトヅク カト ジョウタイ ニ オケル MTO タイ MTS サイテキ セイサン ザイコ セイサク

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Abstract

Competition and continuous improvement efforts have led many firms to review their production-inventory practices. In particular, given the push toward a "zero-inventory" goal, major companies have begun to search for conditions that determine when it is optimum to hold a finished-goods inventory and when it is not. There are two production policies. If a finished-goods inventory is held for a product, the product is produced as "make-to-stock" (MTS), and if it is not, it is produced as "make-to-order" (MTO). Note that the designation of a product as MTO merely indicates stockless production, and does not mean that the product is made to order due to custom specifications. Recently, Arreola-Risa et al. proposed the optimum conditions for MTO and MTS policies using the M/G/1 queuing model under the base-stock inventory policy as the production-inventory system model. To address the optimality of MTS and MTO policies, they considered a company that produces multiple products facing random demands and the inventory holding costs of managing the production-inventory system. However, they did not discuss the optimum base-stock level in the case of adopting the MTS policy and the derivation of the total expected cost. Hirota et al. proposed not only the optimum conditions for MTO and MTS policies, but also the optimum base-stock level for the MTS policy using the M/Er/1 queuing model as the production-inventory system model. However, they discussed this under stationary state conditions and the time element was not included. In this study, we propose the optimum production-inventory policy for MTO versus MTS under transitional state conditions, where the time element is taken into consideration using the M/M/1 queuing model instead of the M/Er/1 queuing model as the production-inventory system model.

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