Average-Cost Optimal Policies for an Unreliable Flexible Multiproduct Machine

Abstract

This paper is concerned with optimal production planning on a single failure-prone flexible machine that produces N distinct part types. The machine is flexible in the sense that no setup is required for switching from production of one part type to another. We consider the problem of controlling production rates to minimize the expected long-run average cost of product surpluses over time. We assume constant unit holding and shortage costs and constant demand rates for the part types. Moreover, the costs are assumed to be the same for all products. We provide an explicit optimal solution for the problem.

Keywords: multiproduct FMS, long run average cost , hedging point policy, flexible manufacturing systems, unreleliable machines, production planning

JEL Classification: M11, C61