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Impact of inventory inaccuracy on service-level quality of a multiproduct production line with product priorities

Author

Listed:
  • Daniel Thiel
  • Vincent Hovelaque
  • Thi Le Hoa Vo

    (CREM - Centre de recherche en économie et management - UNICAEN - Université de Caen Normandie - NU - Normandie Université - UR - Université de Rennes - CNRS - Centre National de la Recherche Scientifique)

Abstract

This article focus on the behaviour of a multi-product batch production line with fixed capacity which is scheduled according to inaccurate inventories (IRI). We assume an unlimited supply of raw materials and a constant demand for the different finished goods. The ordering policy of this production line is based on a (Q,R) continuous review, lost-sales inventory model and on given priority for each product using the same production line. Simulation modelling is proposed to investigate the relationship between the quality of service, safety stock and inventory inaccuracy under demand variations for each product. It is shown that the service-level quality is a non-monotone function of the inaccuracy rate, i.e. the service-level quality increases twice up to an IRI's level and decreases after. This unusual phenomenon has been observed which goes against certain empirical practices in the SMEs that safety stock is only necessary for certain intervals of data inaccuracy rate.

Suggested Citation

  • Daniel Thiel & Vincent Hovelaque & Thi Le Hoa Vo, 2010. "Impact of inventory inaccuracy on service-level quality of a multiproduct production line with product priorities," Post-Print halshs-00517496, HAL.
    • Handle: RePEc:hal:journl:halshs-00517496
    as

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