Analysis of multi-stage production/inventory system with an acceptable response time

This paper describes a method to decide the inventory levels of semifinished and finished products so as to realize the target service rate by shipping the finished products within a specified time which we call the acceptable response time. We analyze the substitution relation between the acceptable response time and the inventory levels of semifinished and finished products. As a result, inventory levels required according to the length of the acceptable response time under the condition of satisfying the target service rate are obtained. The validity of our method is also demonstrated through simulation experiments with the conditions given by the analysis.