Performance analysis of a single-station MTO/MTS hybrid production system

We consider an single-station production system that produces standard products for ordinary demands and custom products for specific demands. Custom products are made by alternating the existing standard ones from inventory with additional works and base-stock control policy is applied to control the production of the standard product. In this system, the production of the custom products for specific demands has higher priority than the production of the standard product. The fill rate of the ordinary demand and the on-time-delivery-rate of the specific demand are considered as the measures of the qualities of service. By assuming a Markovian system, qualities of service under base-stock policy are derived; furthermore, the optimal base-stock level can be obtained numerically under the requirements on the qualities of services.