Performance Evaluation on Base-Stock Levels in a Single-Station Production System

We consider a single-station production system adopting make-to-stock production to deliver products to ordinary demands. The base-stock inventory control is applied to the production. However, it also produces custom products when it receives special demands. The metric of the quality of service for ordinary demands is the fill rate and for the special demands is the on-time-delivery-rate. These two qualities of service depends on the base-stock level. In this study, by assuming an Markovian system, qualities of service under a given base-stock level are derived. We then are able to set the base-stock level under the requirements on qualities of services, furthermore, we numerically solve the optimal base-stock level under some cost structure.