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We examine optimality and performance of a tandem manufacturing line driven by a surplusbased decentralized production control strategy. The main objective of this type of production strategies is to guarantee that the cumulative number of produced products follows the cumulative production demand on the output of the given network. The basic idea of surplus-based control strategy is presented for the case of one manufacturing machine. We prove that this strategy is optimal. Then, a flow model of a line composed of arbitrarily many machines with bounded buffers is analyzed. We prove that the surplus-based production control enables this network to efficiently follow the product demand and establish the relation between the efficiency in the production tracking error and the intermediate inventory levels of a line. Performance and robustness of the flow model of the closed-loop manufacturing line are illustrated by computer simulations.

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