The Performance of Replenishment Systems under Optimal Settings

The problem of optimizing decision variable settings in a single-stage replenishment loop with capacityconstrained batch processing is examined. Simulation and response surface methods are used to model total inventory and delivery service performance for a continuous-review reorder point system and a singlecard Kanban system. Performance tradeoff curves based on optimal settings are created using non-linear optimization. The area under these curves is used as a single response to facilitate comparison. Results show that under time-varying demand the reorder point system outperforms the Kanban system slightly. It is also observed that under optimal settings the area under the tradeoff curves changes linearly with changes in lot set up times. The behavior is similar for both the reorder point and Kanban systems. When settings are not optimal the areas under the tradeoff curves change linearly with setup times only if the lot sizes are relatively large.