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- Title
Managing capacity and inventory jointly for multi-server make-to-stock queues.
- Authors
Reed, Josh; Zhang, Bo
- Abstract
We consider joint capacity-inventory management for multi-server make-to-stock queues operating under a base stock policy. The number of servers corresponds to the capacity decision, and the base stock level is the inventory decision. Our goal is to minimize a combination of capacity, inventory, and backordering costs. We develop a square-root rule for the joint decision and justify the rule analytically in a many-server queue asymptotic framework. We demonstrate the accuracy of the square-root rule, first via our derivation and numerical assessment of a novel corrected diffusion approximation and then more directly by conducting extensive numerical experiments. Finally, we provide operational insights into the trade-offs involved in such joint management problems, through various analysis based on the square-root rule as well as a comparison with analogous results for single-server make-to-stock queues.
- Subjects
INVENTORY control; QUEUING theory; SQUARE root; APPROXIMATION theory; NUMERICAL analysis
- Publication
Queueing Systems, 2017, Vol 86, Issue 1/2, p61
- ISSN
0257-0130
- Publication type
Article
- DOI
10.1007/s11134-017-9519-0