Least cost safety inventory for large transfer lines

The term transfer line represents a synchronized serial production line where the output from each production stage is equal to the output of the line. The efficiency of the line is the fraction of good units produced over an infinite time horizon. Loss of production due to breakdowns or defective items at any stage stops the entire line temporarily and this often results in low efficiency. The efficiency can be increased by adding safety inventories to decouple the stages. This paper presents a model and a simulation method for determining the safety inventories needed at each stage to ensure that a prespecified efficiency is met and that the carrying cost of the total safety inventory is minimized. The solution procedure is applicable to large transfer lines and can accommodate any theoretical or empirical probability distribution for breakdowns and production of defective items.