Analytic Models for When and How to Expedite in Make-to-Order Systems

Expediting is defined as using overtime or subcontracting to supplement regular production. This is usually done when the number of backorders has grown to be unacceptably large. In this paper, we consider analytic models for deciding when and how to expedite in a single-product make-to-order environment. We derive the structure of the optimal expediting policy in both continuous- and discrete-time cases. The continuous-time model corresponds best to subcontracting and the discretetime model corresponds to either overtime or subcontracting. Models for performance analysis of the continuous-time case are also given.