A TECHNIQUE TO MINIMIZE OVERTIME IN THE CAPACITATED MRP PROBLEM

Since the development of early versions of material requirements planning (mrp) systems, it has been known that a weak link in this technique is the failure to consider the available capacity at the time the lot sizes for individual items are calculated. Ignoring the available capacity may result in infeasible production plans, i.e., those that can only be accomplished with the use of overtime. We present a technique to search for feasible production plans by means of minimizing the total overtime. The technique is based on modifying periodic-order-quantity (poq) lot sizes within a tabu search framework. Computational experiments with the largest problem structure reported in the literature show that the procedure is effective in determining lot sizes for individual items that either minimize or eliminate overtime. Additional experiments reveal that, with appropriate calibration of search parameters, the procedure is also able to deal with more general cost functions (e.g., those that include holding and setup costs).     

MATERIAL PLANNING FOR A REMANUFACTURING FACILITY

This article describes the first fully integrated material planning system to facilitate the management of a remanufacturing facility. A number of firms are already engaged in this activity. They remanufacture automobile, truck, and other vehicle components, like starters, alternators, transmissions, and so forth. These firms take in used components, disassemble them, and assemble saleable products from the good parts they find. There is considerable uncertainty in the supply of used components, the good parts in those components, and the demand for remanufactured products. Our system is based on material requirements planning logic, something that many firms in the industry are already familiar with. Meetings with experts in the industry were used to set the parameters of the system and evaluate its approach.     

A GENERAL APPROACH FOR COORDINATING PRODUCTION IN MULTIPLE-CELL MANUFACTURING SYSTEMS

We introduce a general approach to the coordination and control of material and information flow in multiple cell manufacturing systems. This approach uses production authorization cards (called PAC system) and generalizes such well-known approaches as MRP (material requirements planning), KANBAN (japanese card system), OPT (optimized production technology), BSS (base. stock system), IC (integral control), CONWIP (constant work-in-process), and others. It provides a framework for developing coordination and control mechanisms that combine the desirable features of more than one of these traditional approaches. The coordination is achieved by the rules that determine when and how material and information flow through the system and by the appropriate choice of the parameters of these rules. We also discuss various models of the PAC system that can be used to gain insight into the impact of the choices of the parameters. Directions for future research in this area is also outlined.     

DECOMPOSITION ALGORITHM FOR PERFORMANCE EVALUATION OF AGV SYSTEMS

This paper proposes a realistic queueing model of automated guided vehicle (agv) systems in just-in-time production systems. The model takes into consideration return paths, Erlang distributed service times, and pull-type dispatching rule, assuming finite buffer capacities. Since it has no product-form solution and natural decomposability due to complex nontree fork-cum-join architecture and dynamic dispatching rules, we propose a machine-based decomposition algorithm for the performance evaluation of the model. Each decomposed module consists of the processing machine and its dispatching station. Three flow probabilities, derived from flow conservation analysis, relate the modules, which are updated iteratively until the parameters converge. The numerical results from a real-life Agv system application show that the algorithm is reasonably accurate.     

PLANNING AND SCHEDULING THE REPAIR SHOPS OF THE DEUTSCHE LUFTHANSA AG: A HIERARCHICAL APPROACH

To plan and schedule the repair shops for recoverable parts at Deutsche Lufthansa AC, we designed a hierarchical model consisting of two levels. The top level calculates the optimal number of parts in the system to guarantee a certain service level while minimizing the capital tied up in parts. Given this provision, the lower level schedules the repair of parts so that the service level is actually maintained. Using queuing theory, the solution gives special attention to the different hierarchical dependencies. Lufthansa has implemented the model for its repair shops of electronic parts. Their experience with the model is discussed briefly.     

QUANTIFYING THE IMPACT OF INVENTORY HOLDING COST AND REACTIVE CAPACITY ON AN APPAREL MANUFACTURER'S PROFITABILITY

This paper was motivated by the operational problems faced by Northco, a school uniform manufacturer in the Northeastern United States. Northco was facing high working capital costs while also incurring high stockout and markdown costs. This paper models the impact of inventory holding cost and reactive capacity on Northco's targeted understocking and overstocking cost and offers a solution methodology for such problems. We quantify the impact of varying inventory carrying costs (and hence, high working capital costs) on stockout costs and the value of additional capacity. Our results illustrate that apparel manufacturers with high working capital costs, and hence high inventory carrying costs, should target higher stockout costs and achieve lower capacity utilization. The results presented have application beyond Northco because high working capital cost is endemic to many supply chains.     

EVALUATING THE ECONOMIC COST OF ENVIRONMENTAL MEASURES IN PLANTATION HARVESTING THROUGH THE USE OF MATHEMATICAL MODELS

An important issue being discussed for Chilean pine plantation policies is the application of environmental protection measures when managing its timber areas. Typical measures, already in place in more developed countries, include imposing riparian strips and protecting fragile soils from the use of heavy machinery. While environmental protection measures have been considered vital for decades, so far there has been almost no attempt to quantify both the benefits and costs of these measures. This paper attempts to measure the costs associated with the main measures which can help both the forestry firms and the government evaluate the cost impact of the new environmental protection regulations being studied. The analysis for different environmental scenarios is carried out by modifying a mixed integer LP, currently used for tactical planning by one forestry firm.     

AN EXPLORATORY STUDY OF PATTERNS OF PRIORITIES AND TRADE-OFFS AMONG OPERATIONS MANAGERS

A survey of 15 firms showed that agreement among operations managers on competitive priorities is related to agreement on long-run strategic trade-off decisions and not to agreement on shortrun trade-offs. Furthermore, intended short-run actions were often in conflict with stated competitive priorities. Use of management-by-objectives linked to performance appraisal was related to agreement on competitive priorities.     

AN APPROACH FOR IMPROVED INTERPRETATION OF MULTIVARIATE ANALYSIS *

This paper proposes a method, canonical rotation analysis, which facilitates the substantive interpretation of results in multivariate analysis. Canonical rotation analysis is developed as a model which integrates multivariate least squares approaches and the varimax rotation criterion. The generalized applicability of the model to canonical correlation, multiple discriminant analysis, and multivariate analysis of variance is developed. The advantages and limitations of canonical rotation analysis are discussed and illustrated in the context of an industrial marketing research problem.     

THE EFFECTS OF DEGENERACY ON COST-COEFFICIENT RANGES AND AN ALGORITHM TO RESOLVE INTERPRETATION PROBLEMS

The problems of determining valid shadow prices and of performing a valid sensitivity analysis for managerial purposes are considered. For primal degenerate optima, earlier results on finding shadow prices are used to propose a clear and efficient method for finding valid cost-coefficient ranges. An example is used to demonstrate how managerial information can be obtained at degenerate optima.     

THE USE OF INDUSTRIAL SOFTWARE TO CREATE EXPERIENTIAL LEARNING ACTIVITIES IN OPERATIONS MANAGEMENT COURSES

Computer-based manufacturing planning and control (MPC) systems are widely used in industry to gain competitive advantage through integration and coordination of managerial activities. In collegiate business schools, important operations management activities are taught and studied, often by sequential examination of discrete topics such as aggregate production planning, master production scheduling, capacity planning, material planning, and production activity control. This paper explores the potential use of industrial MPC software in the classroom to create experiential learning activities that address the dynamic and integrative nature of operations management. Experiences with this pedagogical approach over the past decade are reported.     

ON FINDING AN INITIAL SOLUTION FOR THE DUAL SIMPLEX ALGORITHM

Torrance [4] has proposed a “new” approach to finding an initial solution of a linear programming problem for use in conjunction with the dual simplex algorithm. The purpose of this note is to comment on two aspects of that paper. Firstly, Torrance's method is not new at all, but was proposed in 1958 by Wagner. Secondly, the method can be implemented much more efficiently than Torrance suggests.     

DESIGN OF AN M.B.A. SEMINAR ON THE IMPLEMENTATION OF OPERATIONS RESEARCH/MANAGEMENT SCIENCE *

This paper reports on an innovative seminar in which implementation of operations research and management science was the primary theme. Traditional educational strategies have sought to improve OR/MS acceptance by further exposing managers and management scientists to OR/MS techniques and management problems respectively. The present approach assumes that an understanding of the barriers to successful implementation and a knowledge of possible strategies for overcoming them are potentially more productive than the study of more OR/MS techniques. The seminar was designed to combine straightforward reading and discussion with empirical research on actual implementation situations. It is suggested that educators consider the value of this type of educational exercise in OR/MS curricula and M.B.A. programs.     

SOCIAL LEARNING THEORY AND THE IMPLEMENTATION OF PRODUCTION INNOVATION*

In a study of the implementation of production innovation using a social learning theory focus, four organizations were monitored with a real-time study design. The following propositions were strongly supported: (1) During the initial implementation period (3–4 months), the stress felt by personnel in new user organizations was significantly higher (p < .01) than for organizations previously experienced with technology; (2) Firms experienced with the new technology obtain early success when compared with inexperienced firms (p < .01). Moderate support was found for the proposition that new users rely heavily on original equipment manufacturers for demonstration to acquire new skills, but gradually models within the user organization emerge as the dominant influence. The proposition that new users have significantly higher imitation scores than users experienced with the technology was only weakly supported. No substantive or significant changes in the attitudes of users toward the innovation were found during the first three to four months of the implementation period. These and other results suggest that longitudinal studies of this type ought to be carried out over periods in excess of 2 1/2 years. Implications for the management of change are presented.     

AN EMPIRICAL INVESTIGATION OF THE DIMENSIONALITY OF THE CONCEPT OF INFORMATION *

An empirical study is described that derives the dimensionality of the concept of information. The resulting information structure was found to be in agreement with the structures suggested in the literature. Additionally, subject evaluations of three distinct report formats were determined using the derived dimensions of information. A graphical format was found to be preferred over both a tabular format and a bar chart format.     

UNSUCCESSFUL IMPLEMENTATION THE CASE OF A COMPUTER-BASED ORDER ENTRY SYSTEM

This paper discusses results of a longitudinal field experiment to evaluate the implementation of a computer-based system. This new system includes the introduction of an optically scanned order input form and new computer programs. It is hypothesized that successful implementation would be affected by the quality of service and the personal costs and benefits to the users of the new system. The experimental results show a marked reduction in job satisfaction after implementation of the new system. The implications of the findings for the implementation of computer-based systems in general are discussed.     

THE VALIDITY OF THE INDEPENDENT INCREMENTS ASSUMPTION FOR PRODUCTION: AN EMPIRICAL STUDY OF AN AUTOMOTIVE ASSEMBLY PLANT

In assembly plants, random line stoppages cause production variability. For analytic tractability and data availability, researchers commonly assume that the production process possesses the independent increments property (necessary for a process to be Poisson). If the production process has independent increments, then the production in any interval is independent of the production in any other nonoverlapping interval. This property means, for one thing, that the current period's production is never influenced by previous production periods. Intuition, however, suggests that current production could be correlated to past production-violating this assumption of independence. If production problems persist from one period to the next, then one would expect the production in adjacent time periods to be correlated. Although the independent increments property is oflen assumed, its validity has not been demonstrated in practice. We analyze data from an automotive assembly plant to assess the validity of the independent increments assumption for its production.     

CAPACITY AND PRODUCTION DECISIONS IN STOCHASTIC MANUFACTURING SYSTEMS: AN ASYMPTOTIC OPTIMAL HIERARCHICAL APPROACH

We present a new paradigm of hierarchical decision making in production planning and capacity expansion problems under uncertainty. We show that under reasonable assumptions, the strategic level management can base the capacity decision on aggregated information from the shopfloor, and the operational level management, given this decision, can derive a production plan for the system, without too large a loss in optimality when compared to simultaneous determination of optimal capacity and production decisions. The results are obtained via an asymptotic analysis of a manufacturing system with convex costs, constant demand, and with machines subject to random breakdown and repair. The decision variables are purchase time of a new machine at a given fixed cost and production plans before and after the purchase. The objective is to minimize the discounted costs of investment, production, inventories, and backlogs. If the rate of change in machine states such as up and down is assumed to be much larger than the rate of discounting costs, one obtains a simpler limiting problem in which the random capacity is replaced by its mean. We develop methods for constructing asymptotically optimal decisions for the original problem from the optimal decisions for the limiting problem. We obtain error estimates for these constructed decisions.     

THE DEVELOPMENT OF AN INTEGRATIVE CURRICULUM IN AN UNDERGRADUATE BUSINESS PROGRAM*

This paper describes how the core portion of the undergraduate business program at Indiana University was revised to facilitate integration of basic functionally oriented decision making skills and thus help students gain a deeper understanding of the interdependence of business decisions. It relates, in essence, why and how a single computer-oriented case study which demanded a solution to a large-scale, unified finance-marketing-production problem was used at Indiana University, mentions how we plan to accomplish further integration of functional material, and provides some insight into student reaction to what was, in fact, a massive project from both student and administrative points of view.     

UPSTREAM VOLATILITY IN THE SUPPLY CHAIN: THE MACHINE TOOL INDUSTRY AS A CASE STUDY

Cyclicality is a well‐known and accepted fact of life in market‐driven economies. Less well known or understood, however, is the phenomenon of amplification as one looks “upstream” in the industrial supply chain. We examine the amplification phenomenon and its implications through the lens of one upstream industry that is notorious for the intensity of the business cycles it faces: the machine tool industry. Amplification of demand volatility in capital equipment supply chains, e. g., machine tools, is particularly large relative to that seen in distribution and component parts supply chains. We present a system dynamics simulation model to capture demand volatility amplification in capital supply chains. We explore the lead‐time, inventory, production, productivity, and staffing implications of these dynamic forces. Several results stand out. First, volatility hurts productivity and lowers average worker experience. Second, even though machine tool builders can do little to reduce the volatility in their order streams through choice of forecast rule, a smoother forecasting policy will lead companies to retain more of their skilled work force. This retention of skilled employees is often cited as one of the advantages that European and Japanese companies have had relative to their U. S. competitors. Our results suggest some insights for supply chain design and management: downstream customers can do a great deal to reduce the volatility for upstream suppliers through their choice of order forecast rule. In particular, companies that use smoother forecasting policies tend to impose less of their own volatility upon their supply base and may consequently enjoy system‐wide cost reduction.