Application of queuing theory in production-inventory optimization

Authors

1 Department of Industrial Engineering, Iran University of Science and Technology, Narmak, 16844, Tehran, Iran

2 Department of Industrial Engineering, Sharif University, Azady, Tehran, Iran

Abstract

This paper presents a mathematical model for an inventory control system in which customers’ demands and suppliers’ service time are considered as stochastic parameters. The proposed problem is solved through queuing theory for a single item. In this case, transitional probabilities are calculated in steady state. Afterward, the model is extended to the case of multi-item inventory systems. Then, to deal with the complexity of this problem, a new heuristic algorithm is developed. Finally, the presented bi-level inventory-queuing model is implemented as a case study in Electroestil Company.

Keywords