Zero-Inventory Conditions for a Two-Part-Type Make-to-Stock Production System

We consider the dynamic scheduling of a two-part-type make-tostock production system using the model of Wein [12]. Exogenous demand for each part type is met from finished goods inventory; unmet demand is backordered. The control policy determines which part type, if any, to produce at each moment; complete flexibility is assumed. The objective is to minimize average holding and backorder costs. For exponentially distributed interarrival and production times, necessary and sufficient conditions are found for a zero-inventory policy to be optimal. This result indicates the economic and production conditions under which a simple make-to-order control is optimal. Weaker results are given for the case of general production times.