Necessary and sufficient conditions for a zero-inventory policy to be optimal in an unreliable manufacturing system
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It is generally argued that inventories are a buffer against uncertainty, and that therefore one should strive to maintain a positive inventory whenever there is any uncertainty. The authors show that there are ranges of values for mean time between failures and mean repair times for which zero-inventory policies are exactly optimal. This provable optimality runs counter to conventional arguments, reinforcing the case for zero-inventory policies which is currently argued on the grounds that it enforces a healthy discipline on the entire manufacturing process.
