The Effects of Intermediate-Parts Stock on Production and Final-Product-Stock Levels

Abstract

The purpose of this paper consists in quantitative analysis of the function of intermediate-parts stock as the buffer which absorbs final-product-demand fluctuations in a make-to-stock company. Conclusions are as follows : (1) production-level fluctuations and final-product-stock levels can be reduced by having intermediate-parts stock and (2) the degree of the reduction becomes the larger if the production levels sharply fluctuate.