This dissertation consists of three essays that address issues in production and inventory management.
The first essay focuses on inventory management. We study a fixed-reorder-interval, order-up-to (R, nT) inventory replenishment policy in a two-stage serial system with stochastic demand at the lower stage. We develop a simulation based optimization procedure to estimate the long-run average cost and optimal parameter values. The numerical results show that the (R, nT) policy is, on average, 4.4% (5.8%) more expensive than the continuous review (r, nQ) policy (lower bounds). The cost difference is much smaller when the setup cost at the upstream stage and the demand rate are larger. The (R, nT) costs are relatively insensitive to the choice of reorder intervals, T, provided the best corresponding order-up-to level, R, is selected.
The second essay deals with production scheduling. We consider the computationally-hard, re-entrant flow, cyclic scheduling problem considered by Graves et al. (1983) and Roundy (1992). We present two problem formulations to minimize job flow time (work-in-process), given a target cycle length (throughput). We describe an efficient optimization method and a new ImproveAlignment (IA) heuristic. Numerical experiments indicate that proposed optimization method was significantly faster than CPLEX-8.0 and solved 40% more test instances to optimality within the specified run time and memory limits. The proposed IA heuristic quickly produced solutions which were, on average, (i) 22% better than those from the Graves' et al. heuristic and (ii) within 14% of the optimal.
The third essay focuses on resource planning. We examine a single end-product, discrete-time inventory replenishment problem in a material requirements planning (MRP) environment with demand uncertainty and supply capacity limits on replenishment orders. We develop a simulation-based optimization approach and two novel heuristics. We also evaluate the traditional MRP and safety stock approaches for this problem. Computational experiments show that the two novel heuristics perform very well (on average within 0.06% and 0.66% of optimal, respectively); traditional MRP and safety stock approaches incur higher costs, on average, 45% and 12.05% higher than optimal, respectively. We also provide managerial insights on the effects of different input factors.