Comparison of optimal buffer allocation in flow lines under installation buffer, echelon buffer, and CONWIP policies

We compare the optimal buffer allocation of a manufacturing flow line operating under three different production control policies: installation buffer (IB), echelon buffer (EB), and CONWIP (CW). IB is the conventional policy where each machine may store the parts that it produces only in its immediate downstream buffer if the next machine is occupied. EB is a more flexible policy where each machine may store the parts that it produces in any of its downstream buffers. CW is a special case of EB where the capacities of all buffers, except the last one, are zero. The optimization problem that we consider is to maximize the average gross profit (AGP) minus the average cost (AC), subject to a minimum average throughput constraint. AGP is defined as the average throughput of the line weighted by the gross marginal profit (selling price minus production cost per part), and AC is the sum of the average WIP plus total buffer capacity plus transfer rate of parts to remote buffers, weighted by the inventory holding cost rate, the cost of storage space, and the marginal cost of transferring parts to remote buffers, respectively. Numerical results show that the optimal EB policy generally outperforms the optimal IB and CW policies. They also show that as the production rates of the machines decrease, the relative advantage in performance of the EB policy over the other two policies increases. When the cost of transferring parts to remote buffers increases, the dominance of the EB policy over the IB policy decreases while the dominance of the EB policy over CW increases.