Impact of random delay on Replenishment and production control strategies

This paper considers a stochastic optimal control problem of unreliable three stages manufacturing systems. The supplier and the transformation stage are both subject to random events. Moreover, due to the periods of unavailability of the supplier, a random delay could postpone the reception of the order. Our objective is to find a control policy for the supply and production activities that minimizes the incurred cost and to propose a practical approach aiming to evaluate and quantify the control policy. Stochastic dynamic programming and numerical methods combined to a simulation based approach are thus proposed to achieve a close approximation of the production and supply policy. To illustrate the usefulness of the combined approach extensions to cover more complex systems, were optimal control theory may not be easily used, are developed and analyzed. To illustrate the practical usefulness of the approach, an application aiming to develop a quantitative tool to help establishing and negotiating order costs is presented.