Product mix variability with correlated demand in two-stage food manufacturing with intermediate storage

In food processing, market demands are increasingly important, resulting in regular introductions of new products, or special offers. Often, such an introduction or promotional effort affects demand of other products or packaging types. Here we study the effect of such correlated demand. More specifically, the aim of this paper is to study the effect of product mix variability and correlated demand in a two-stage food production system. Results from a simulation study show that increasing correlation on the product level results in an increase in average lead times. A slightly smaller effect is seen for correlation on the package level. Similar results are found for average waste. Increased variability amplifies these effects.