Article ID: | iaor19981631 |
Country: | Netherlands |
Volume: | 87 |
Issue: | 1 |
Start Page Number: | 122 |
End Page Number: | 131 |
Publication Date: | Nov 1995 |
Journal: | European Journal of Operational Research |
Authors: | Nicholls Miles G. |
In this paper, the problem posed by attempting to obtain a completed order (i.e., a customer ordered quantity) from a production process is examined and a solution is offered. In many production processes, an order consists of the manufacturing of a specified number of identical (but ‘tailor-made’, i.e., not ex stock) items which need to be supplied to the customer in a single lot, normally within a specified time. Examples of this are the production of non-standard glass door panels or double glazed windows in the glass industry. The need to be able to produce a completed order within a specified number of ‘passes’ (i.e., repetitions of the manufacturing process), stems from the desire to reduce penalties and costs associated with under-production as well as those associated with over-production. Alternatively, the objective may be the attainment of a customer service level. A belief held within certain areas of the glass industry is that it is better to under-produce and manufacture the ordered quantity in many passes, rather than to over-produce and perhaps complete the order in one pass. The former situation necessitates the storage of the partial order until completion thereby incurring carrying costs associated with inventory and possible penalties of not fulfilling a contract within the prescribed time. The latter situation has customer related costs amongst its list. By looking at the nature of the costs associated with the order completion problem and the structure of the problem itself, a solution is posed and some misconceptions put to rest.