DYNAMIC INTERACTION OF PRICE AND DESIGN QUALITY FOR PRODUCTS WITH CONVEX PRODUCTION COSTS

Price and design quality define value for customers and are often used by firms to position products in the marketplace. Setting price and quality level on a new product for the first time and making appropriate changes over time to these variables to reflect changing conditions in the market requires careful coordination of design, manufacturing, and marketing variables. We present a control theoretic model to study the complex interaction among price, quality, and cost during the life cycle of a product. Our model considers the major design-manufacturing-marketing tradeoffs and helps determine optimal pricing, design quality, and production strategies in a dynamic environment with convex production costs.     

Manufacturing Proactiveness and Performance*

Since Skinner's [40] landmark article depicting the manufacturing function as the “missing link” in corporate strategic processes, a portion of the blame for inferior performance in many firms has been attributed to the subordinate strategic position of manufacturing. It has been argued that part of the solution to misalignments between the capabilities possessed by manufacturing and the requirements dictated by customers is for manufacturing to take a more proactive stance. However, little research has been reported which examines manufacturing proactiveness empirically. In this paper, we address this gap by developing an operational definition of manufacturing proactiveness and testing empirically whether a link exists between proactiveness and performance based on data collected from a sample of manufacturers. Based on the manufacturing strategy literature, we identify two major dimensions of manufacturing proactiveness: (1) the degree of manufacturing's involvement in the strategic processes of the business unit; and (2) the degree of commitment to a long-term program of investments in manufacturing structure and infrastructure aimed at building capabilities in anticipation of their need. We develop reliable scales for measuring each of the dimensions of proactiveness and use the data to provide evidence of a clear link between manufacturing proactiveness and business performance. We show that investments in structural programs coupled with either high levels of manufacturing involvement in strategic processes or planned investments in infrastructural programs correlate with higher than average performance.     

The Individually Responsible and Rational Decision Approach to Economic Lot Sizes for One Vendor and Many Purchasers: A Comment*

Joglekar and Tharthare [6] presented an alternate approach for minimizing total inventory carrying and ordering costs of a vendor and the purchaser(s). This approach permits the vendor and the purchaser(s) to rationally select their operating policies. Joglekar and Tharthare claimed that their approach is more economical than the joint lot-size approach. In this note we identify some conceptual issues in their approach and demonstrate the superiority of the joint lot-size approach with the help of an example.     

An Evaluation of Capacity Sensitive Order Review and Release Procedures in Job Shops

We investigate the performance of capacity-sensitive order review and release (ORR) procedures in job shop environments that have not been previously explored. Previous research has ignored the case of job shops which must perform to very tight due-dates because of time-sensitive customers. We propose and test a new capacity sensitive ORR procedure called path based bottleneck (PBB) in such environments, along with the modified infinite loading (MIL) procedure which has been shown to work well in several studies. We compare the performance of these two controlled release rules with that of immediate release rule under different conditions of capacity utilization and customer specified exogenous duedates. Our results indicate that PBB performs well in lowering total costs when due-dates are tight, while MIL is a better procedure with relatively loose to medium due-dates. We also show that in many cases, the shortest processing time (SPT) dispatching rule is a superior performer than a due-date based rule like critical ratio (CR); a conclusion which is contrary to the existing research in this area. In addition, the shop floor control policies recommended are shown to be sensitive to the cost structure of the firm. The managerial implications of this research in providing effective shop floor control in job shops operating under tight due-date conditions are also discussed.     

Redesigning a Cellular Manufacturing System to Handle Long-Term Demand Changes: A Methodology and Investigation*

Cellular manufacturing systems have been proposed as an alternative to the job shop since they provide some of the operational benefits of a flow line production process, while retaining to some extent the flexibility of job shops. However, this must be balanced against the possibility of additional initial investments in equipment to form the cells and a certain loss in manufacturing flexibility, particularly in terms of the ability to deal with long-term demand changes. This paper presents a model-based heuristic cell system redesign methodology to deal with such demand changes. The methodology is validated and applied to system designs generated from several data sets published in the literature. Results show that different kinds of demand changes incur distinct kinds of costs. Further, characteristics of cell designs that can handle long-term demand changes at least cost are identified.     

The Impact of Learning and Labor Attrition on Worker Flexibility in Dual Resource Constrained Job Shops

This study investigates the impact of worker learning, worker flexibility, and labor attrition on the system performance of a dual resource constrained (DRC) job-shop. The effects of learning and labor attrition have not been previously addressed in DRC literature. Results from the study, consistent with previous literature, show that the greatest benefits are achieved when inter-departmental worker flexibility is incrementally introduced into the system. In addition, the learning environment, which depends on the initial processing time of jobs and the learning rates of workers, is shown to impact the acquisition of flexibility. The study also shows that the impact of labor attrition on system performance under certain shop conditions may be significant.     

TRACKING PRODUCT-PROCESS INTERACTIONS: A RESEARCH PARADIGM*

To design (or redesign) a competitive product, it is imperative that both the sales and manufacturing cost implications are assessed in a structured way. That is, the interactive (multidimensional) aspects of manufacturing and marketing variables need to be positioned in a proper perspective so that the system impact of variation in one or more variables may be ascertained quickly. In this paper we show how some of the system-related paradigms can be used as foundations for developing quantitative and qualitative models for tracking such interactive ímpacts. The emphasis is not on building complex mathematical models to solve specific problems but on providing a framework where system properties expressed as simple postulates can be used in an intelligent way to assess the impact of improvements in specific product-process scenarios.