© 2014

Capacity and Inventory Planning for Make-to-Order Production Systems

The Impact of a Customer Required Lead Time Distribution


  • Identifies inventory reduction potentials for MTO production systems

  • Develops equations and model frameworks as well as explicitly solved optimization problems that can easily be adopted by researchers

  • Explains how the understanding of the influence of customer required lead time supports capacity and inventory decisions


Part of the Lecture Notes in Economics and Mathematical Systems book series (LNE, volume 671)

Table of contents

  1. Front Matter
    Pages i-xv
  2. Klaus Altendorfer
    Pages 1-4
  3. Klaus Altendorfer
    Pages 5-17
  4. Klaus Altendorfer
    Pages 19-42
  5. Klaus Altendorfer
    Pages 99-124
  6. Klaus Altendorfer
    Pages 125-127
  7. Back Matter
    Pages 129-138

About this book


The book presents different models for the simultaneous optimization problem of capacity investment and work release rule parameterization. The overall costs are minimized either including backorder costs or considering a service level constraint. The available literature is extended with the integration of a distributed customer required lead time in addition to the actual demand distribution. Furthermore, an endogenous production lead time is introduced. Different models for make-to-order production systems with one or multiple serial processing stages are developed. Capacity investment is linked to the processing rates of the machines or to the number of the machines. Results are equations for service level, tardiness, and FGI lead time in such a production system. For special cases with M/M/1 and M/M/s queues explicit solutions of the optimization problems or optimality conditions concerning capacity investment and work release rule parameterization are provided.


Inventory Make-to-Order Manufacturing Production Economics Production Systems Queuing Theory Stochastic Modelling

Authors and affiliations

  1. 1.School of Management Dept. of Operations ManagementUniversity of Applied Sciences Upper AustriaSteyrAustria

About the authors

Klaus Altendorfer is Professor for Production and Operations Management at the University of Applied Sciences Upper Austria. He received a PhD in Logistics and Operations Management from the University of Vienna, Austria. Stochastic modelling of production systems, production economics and simulation for production planning improvement are his research topics.

Bibliographic information

Industry Sectors
Chemical Manufacturing
Finance, Business & Banking
Consumer Packaged Goods
Materials & Steel
Energy, Utilities & Environment


From the reviews:

“This book comprises a collection of four research papers the author prepared during his time as a Ph.D. student at University of Vienna. … Using simple queueing models, this thesis aims at deriving analytical expressions for performance measures and insights derived from those. It will inspire future work on production control and manufacturing systems design with a particular emphasis on customer requirements. This book summarizes state-of-the-art insights to capacity and inventory planning and will be useful to students and practitioners.” (P. R. Parthasarathy, Mathematical Reviews, March, 2014)