A make-to-stock system with multiple customer classes and batch ordering

B. Huang, Seyed M.R. Iravani

Research output: Contribution to journalArticleAcademicpeer-review

16 Citations (Scopus)

Abstract

This paper examines the impact of customer order sizes on a make-to-stock system with multiple demand classes. We first characterize the manufacturer’s optimal production and rationing policies when the demand is nonunitary and lost if unsatisfied. We also investigate the optimal policies of a backorder system with two demand classes and fixed order sizes. Through a numerical study, we show the effects of batch orders on the manufacturer’s inventory cost as well as on the benefit of optimal stock rationing. It is shown that batch ordering may reduce the manufacturer’s overall cost if carefully introduced in a first-come-first-served (FCFS) system. With the same effective demand rates, the customers’ order sizes also have a strong impact on the benefit of optimal stock rationing.
Original languageEnglish
Pages (from-to)1312-1320
JournalOperations Research
Volume56
Issue number5
DOIs
Publication statusPublished - 2008
Externally publishedYes

Keywords

  • batch ordering
  • make-to-stock
  • stock rationing

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