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Dynamic resource allocation in a multi-product make-to-stock production system

Hodge, D J and Glazebrook, K D (2011) Dynamic resource allocation in a multi-product make-to-stock production system. Queueing Systems, Theory and Applications, 67 (4). pp. 333-364. ISSN 0257-0130

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    Abstract

    We consider optimal policies for a production facility in which several (K) products are made to stock in order to satisfy exogenous demand for each. The single machine version of this problem in which the facility manufactures at most one product at a time to minimise inventory costs has been much studied. We achieve a major generalisation by formulating the production problem as one involving dynamic allocation of a key resource which drives the manufacture of all products under an assumption that each additional unit of resource allocated to a product achieves a diminishing return of increased production rate. A Lagrangian relaxation of the production problem induces a decomposition into K single product problems in which the production rate may be varied but is subject to charge. These reduced problems are of interest in their own right. Under mild conditions of full indexability the Lagrangian relaxation is solved by a production policy with simple index-like structure. This in turn suggests a natural index heuristic for the original production problem which performs strongly in a numerical study. The paper discusses the importance of full indexability and makes proposals for the construction of production policies involving resource idling when it fails.

    Item Type: Article
    Journal or Publication Title: Queueing Systems, Theory and Applications
    Uncontrolled Keywords: Backordering ; Dynamic programming ; Dynamic resource allocation ; Index heuristic ; Lagrangian relaxation ; Make-to-stock policy ; Queueing control
    Subjects: H Social Sciences > HB Economic Theory
    Departments: Lancaster University Management School > Management Science
    ID Code: 45797
    Deposited By: ep_importer_pure
    Deposited On: 11 Jul 2011 19:38
    Refereed?: No
    Published?: Published
    Last Modified: 23 Sep 2013 15:50
    Identification Number:
    URI: http://eprints.lancs.ac.uk/id/eprint/45797

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