Note on Variability, Buffers, and Inventory

by: William Lovejoy

Publication Date: May 24, 2010
Length: 12 pages
Product ID#: 1-429-081

Core Disciplines: Operations Management/Supply Chain

Partner Collection:

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Teaching Note

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Most production systems are faced with the problem of variability. Customer demand for finished products may vary over time, as may the availability of raw materials and the processing capacity at various stages in the system. This note will discuss some of the types of variability, the consequences of variability, the role of inventory in systems with variability, and possible responses to variability.

Teaching Objectives

After reading and discussing the material, students should:

  • Describe the fundamental tradeoff between utilization and throughput rates versus inventory and throughput times.
  • Develop an overview of how variability affects productive systems and address what actions can be taken to counter the negative effects of variability.