and the Management Sciences Fill-Rate Bottlenecks in Production- Inventory Networks

The bottleneck in a production-inventory network is commonly taken to be the facility thatmost limits ¯ow through the network and thus the most highly utilized facility. A further connotation of ªbottleneck,º however, is the facility that most constrains system-wide perfor-mance or the facility at which additional resources would have the greatest impact. Adopting this broader sense of the term, we look for ®ll-rate bottlenecks: facilities in a production-inventory network that most constrain the system-wide ®ll rate (the proportion of demands ®lled within a ®xed delivery leadtime) or facilities at which either additional production ca-pacity or additional inventory would have the greatest impact on the ®ll rate. We consider systems in which various components are produced through a series of stages holding intermediate inventories and are then assembled into ®nished goods to meet external demands. With each station in the network we associate precise measures of the station's propensity to constrain the ®ll rate. We call a station with a minimal measure a ®ll-rate bot-tleneck and justify this label both theoretically and numerically. Examples show that even the least utilized facility can be a ®ll-rate bottleneck. Unlike utilization, our bottleneck criteria capture information about process variability