An unreliable production system with fluctuating production and demand rates

This paper contains an analytical formulation for performance measurement of an unreliable production-storage operation where production and demand rates for a single item are subject to random fluctuations in the operating environment. These fluctuations are represented as transitions among the states of a continuous-time Markov chain and the demand process is characterised as a compound Poisson process. Assuming that the storage space is limited and the stockouts are lost, the proposed model yields exact expressions for a number of popular performance measures. The model is accompanied by some numerical results.