Analysis of a production-inventory system with unreliable production facility

simulation model, lim-ited information on demand, robustness This paper tests the robustness of analytical results on performance measures for a production-inventory system with an unreliable production facility. A ba-sic model is considered which involves a single produc-tion machine with constant production rate which op-erates as long as the accumulated inventory is below a pre-set threshold, and is idle otherwise. The demand process follows a compound Poisson distribution and the operating time of a machine until failure as well as the repair time of a failed machine are assumed to be exponentially distributed. A demand that cannot be fully satisfied from existing inventory takes whatever is available and the rest of the demand is lost. Ana-lytical results exist only for the special case where the order sizes are exponentially distributed. In this paper, a simulation model is built to obtain performance mea-sures for the same production-inventory system facing other demand processes. These results are used to test the robustness of the analytical results to changes in the demand process. I