Modeling a supply chain as a queuing system

Abstract

This study investigates a two-stage supply chain consisting of multiple suppliers at the first stage and a manufacturer at the second stage. The suppliers and the manufacturer have limited production capacities. The system operates in a manufacture-to-order environment, i.e. the suppliers and the manufacturer employ make-to-stock and make-to-order strategies, respectively. The inventory of each component at each supplier is controlled via base stock policy. The aim of this study is to model the supply chain as a queuing system. Under the necessary assumptions, each supplier is modeled as an M / M /1make-to-stock queue. Moreover, the average outstanding backorders and the average inventory level of each supplier are derived using the queuing model. On the other hand, the manufacturer is modeled as a GI / M /1 queue after deriving an approximate distribution for the interarrival times of the manufacturer. Furthermore, the average number of jobs in the manufacturer's system and the average outstanding backorders at the manufacturer are obtained using the queuing model.