Operations Management: Processes and Supply Chains, 12th Edition

Noninstantaneous Replenishment

If an item is being produced internally rather than purchased, finished units may be used or sold as soon as they are completed, without waiting until a full lot is completed. For example, a restaurant that bakes its own dinner rolls begins to use some of the rolls from the first pan even before the baker finishes a five-pan batch. The inventory of rolls never reaches the full five-pan level, the way it would if the rolls all arrived at once on a truck sent by a supplier.

Figure C.1 depicts the usual case, in which the production rate, p, exceeds the demand rate, d. If demand and production were equal, manufacturing would be continuous with no buildup of cycle inventory. If the production rate is lower than the ...