Optimal inventory control in a production flow system with failures

The authors consider a continuous flow production process subject to failures with an intermediate buffer. Under the practical restriction to the class of (B,b) inventory control policies, they give a procedure for determining the optimal buffer size, B, and control parameter, b. The authors give conditions under which these parameters can be expressed in closed form and show that otherwise they can be computed as the solution of a two-dimensional nonlinear system.