Optimal buffer inventories for multistage production systems with failures

Recently, several procedures have been developed to solve the problem of optimal location and sizing for buffer inventories in a serial production system that is subject to random variations in the magnitude or timing of stage failures, repair times, and demands for finished goods. To handle production systems of realistic complexity, the authors have developed a simplified mathematical model and an efficient solution procedure based on dynamic programming. The solution procedure has been implemented in a portable, public-domain computer program which can also be applied to nonserial systems with diverging branches. The authors illustrate the procedure using a hypothetical diverging-branch system with 15 stages.