Trade-off analysis of buffer stock versus emergency delivery in the knockdown production systems

In the international co-operative knockdown production systems (ICKDPS), the transportation lead time to procure component parts is much longer than actual production lead time. Therefore, in designing an ordering system for the ICKDPS, it is necessary to decide an adequate buffer capacity in order to improve the system reliability for the transportation lead time. In this paper, the authors develop a new pull type ordering system, based on the concepts of just-in-time production systems, which incorporates a backorder function which modifies the backlog carried over from the last period, and includes two types of buffer capacities, that is safety stock and emergency delivery for the ICKDPS. By trading off these two types of buffer capacities, the authors develop a way of determining an economical safety stock level and emergency delivery rate which will assure system performance reliabiltiy to any pre-determined level.