A Model for Optimizing the Buffer Inventory Storage Size in a Sequential Production System

Abstract

Abstract A model is presented here for optimizing the inventory storage capacity of an in-process buffer stock. The buffer stock is present between two operations, each of which has processing time which is exponentially distributed. The benefit or gain from the system of carrying buffer stock is assumed to be proportional to the rate of flow of production. Two costs are incurred by the buffer inventory: one is proportional to the expected on-hand stock, and the second is a facility cost which is proportional to the maximum buffer stock size.