Journal
PRODUCTION AND OPERATIONS MANAGEMENT
Volume 21, Issue 2, Pages 224-235Publisher
WILEY-BLACKWELL
DOI: 10.1111/j.1937-5956.2011.01260.x
Keywords
production and inventory control; admission control; inventory rationing; make-to-Stock and make-to-order
Funding
- Center for Excellence in Logistics and Distribution, Center of eBusiness at MIT, ONR [N00014-95-1-0232, N00014-01-1-0146]
- NSF [DMI-0245352, IIP-0214416, CMMI-0758069]
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In this article, we study optimal production and admission control policies in manufacturing systems that produce two types of products: one type consists of identical items that are produced to stock, while the other has varying features and is produced to order. The model is motivated by applications from various industries, in particular, the automobile industry, where a part supplier receives orders from both an original equipment manufacturer and the aftermarket. The product for the original equipment manufacturer is produced to stock, it has higher priority, and its demands are fully accepted. The aftermarket product is produced to order, and its demands can be either accepted or rejected. We characterize the optimal production and admission policies with a partial-linear structure, and using computational analysis, we provide insights into the benefits of the new policies. We also investigate the impact of production capacity, cost structure, and demand structure on system performance.
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