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Managing Uncertainty in a Serial Production Line

Author

Listed:
  • Eric V. Denardo

    (Yale University, New Haven, Connecticut)

  • Thomas Y. S. Lee

    (University of Illinois, Chicago, Illinois)

Abstract

This paper studies a serial production line that is uncertain. We introduce a linear model of the uncertainty that can exist in the demand for the product and in each stage's processing time, yield, rework probability, and reliability. We construct a linear discrete-time rule for controlling production, and we show that repeated application of this rule leads the system to steady-state conditions, which include closed-form formulas for the mean and variance of each buffer's stock and the mean and variance of the workload in each stage. We optimize these operating characteristics by a convex nonlinear program. For the case of identical stages with no scrap, we show that this optimal solution tends to place larger buffer stocks toward the end of the line. We adapt these discrete-time results to the short-period surrogate of the analogous continuous-time control problem.

Suggested Citation

  • Eric V. Denardo & Thomas Y. S. Lee, 1996. "Managing Uncertainty in a Serial Production Line," Operations Research, INFORMS, vol. 44(2), pages 382-392, April.
    • Handle: RePEc:inm:oropre:v:44:y:1996:i:2:p:382-392
    DOI: 10.1287/opre.44.2.382
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    Cited by:

    1. Douglas Gollin & Martina Kirchberger & David Lagakos, 2017. "In Search of a Spatial Equilibrium in the Developing World," NBER Working Papers 23916, National Bureau of Economic Research, Inc.
    2. Gokan, Toshitaka & Kuroiwa, Ikuo & Nakajima, Kentaro, 2019. "Agglomeration economies in Vietnam: A firm-level analysis," Journal of Asian Economics, Elsevier, vol. 62(C), pages 52-64.
    3. G C Hadjinicola, 2010. "Manufacturing costs in serial production systems with rework," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 61(2), pages 342-351, February.

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