Seminer: Sinem Özkan, “A New Production Policy for M/M/s Make-to-Stock System and Its Renewal Analysis”

A New Production Policy for M/M/s Make-to-Stock System and Its Renewal Analysis

This study considers a production setting of a single-item, make-to-stock production system with parallel production channels, fixed start-up cost and lost sales. The decision should be addressed for managing such a system is the production control decision that dictates when to start production and how much to produce i.e., how many production channels should be activated. If the decision is to activate new channels, a setup cost is incurred per channel. The literature of the control of make-to-stock queues is extended by considering fixed system costs and multiple servers at the same time. We first develop the dynamic programming formulation of the problem and then characterize the structural properties of the optimal policy via value iteration algorithm. According to the numerical observations, optimal production policy is highly dynamic and does not have systematic behaviour for practical purposes. Hence, new/alternative policies that have well-defined structures and are easier to apply are proposed. The main contribution of this research is to calculate the average cost per unit time for M/M/s make-to-stock queues with fixed costs and lost sales under the proposed policy. It is obtained by conducting a renewal analysis. Finally, we get a very practical tool which calculates the average cost for M/M/s make-to-stock queue with setup costs in milliseconds. This study can be adapted for the systems with different service times such as Erlangian and Phase-type.

Short Bio:
Sinem Özkan is a PhD student and research assistant at the Department of Industrial Engineering of Yaşar University in İzmir, Turkey. She received her B.S. and M.S. degrees in Industrial Engineering from Yaşar University in years 2012 and 2016, respectively. Before she joined the M.Sc. program, she worked one year as a production engineer in Hugo Boss Clothing Company. Then, she started working at the Department of Industrial Engineering of Yaşar University in 2013. Her research interests include production/inventory systems, stochastic modeling and optimal control.