Optimization of Semi-Finished Inventory Management in Process Manufacturing: A Multi-Period Delayed Production Model

This study investigates how process manufacturing enterprises can optimize semi-finished inventory (SFI) distribution in delayed production models, with particular attention to differences in cost volatility between single- and multi-period planning scenarios. To address this research gap, we develop a mixed-integer programming model that determines optimal customer order decoupling point (CODP)/product differentiation point (PDP) positions and SFI quantities (both generic and dedicated) for each production period, employing particle swarm optimization for solution derivation and validating findings through a comprehensive case study of a steel manufacturer with characteristic long-period production processes. The analysis yields two significant findings: (1) single-period operations demonstrate marked cost sensitivity to service level requirements and delay penalties, necessitating end-stage inventory buffers, and (2) multi-period optimization generates a distinctive cost-smoothing effect through strategic order deferrals and cross-period inventory reuse, resulting in remarkably stable total costs (≤2% variation observed). The study makes seminal theoretical contributions by revealing the convex cost sensitivity of short-term inventory decisions versus the near-flat cost trajectories achievable through multi-period planning, while establishing practical guidelines for process industries through its empirically validated two-period threshold for optimal order deferral and inventory positioning strategies.