Integrated multi-item production–inventory systems

We study an integrated multi-item production–inventory system with stochastic demands and capacitated production. The problem is to find the base stock levels which minimize expected inventory costs per unit time, for an infinite time horizon. When unit manufacturing times are deterministic or exponentially distributed, we derive analytical expressions that lead to the optimal base stock levels. Our results provide several implications about the interaction of inventories, capacity utilization, and variation in the production environment.