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A production line has three production stations, A, B, and C. In-process storage is possible between the stations, but at the monthly cost of
A production line has three production stations, A, B, and C. In-process storage is possible between the stations, but at the monthly cost of $120 for storage between A and B and $100 between B and C. The storage would offset any station downtime in the preceding station(s). Income per item produced is $10 and the maximum monthly production rate is 1000 units. If the downtimes for stations A, B, and C are 2, 3, and 5 percent, respectively, determine the optimum income-cost relationship from the four possible configurations of in-process inventory management. Assume the station downtimes are statistically independent.
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