ABSTRACT
This chapter describes how inventory-queue can be used as a building block to model manufacturing and supply systems. Based on the inventory-queue framework, an effective approach can be developed to deal with complex network design problems involving both queueing process and stocking control in a network. Because inventories placed at different locations usually incur different costs and have different effects on the service level for end customers, efficient allocation and control of inventory assets present enormous opportunities and, at the same time, pose a great challenge to many companies. To cope with this challenge, formal methods are needed to help understand system dynamics and various trade-offs and to provide decision-making guidelines. An inventory-queue consists of three physical components: an input buffer, a processing unit server in the middle and an output store following the processing unit. The relaxation-recursive method for serial systems and the frontier method for two-stage distribution systems can be combined for the optimization of multistage distribution systems.
