Abstract

We address several aspects related to managing re-entrant lines in a
unified  manner --- capacity  allocation,  inventory  management and
production control.  Our approach to study  these systems is through
simulation based optimization.  Simulation offers the flexibility to
model the  complexities  adequately  while the  gradient computation
(via  Infinitesimal  Perturbation   Analysis)  helps  identify  good
solutions  quickly. Our  framework is a  discrete  time  capacitated
multiple product production-inventory  system operating under a base
stock policy. We  analyze several different  production and capacity
allocation  rules. We  develop  expressions  for  and  validate  the
appropriate IPA derivatives.  These derivatives can  then be used in
an  optimization  tool which  enables the  determination  of optimal
parameters  for the several  policies  proposed. We  also  present a
summary  of insights  obtained  through an  extensive  computational
study.