A dynamic model for requirements planning with application to supply chain optimization

A dynamic model for requirements planning with application to supply chain optimization

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Article ID: iaor19991581
Volume: 46
Issue: 3
Publication Date: May 1998
Journal: Operations Research
Authors: , ,
Abstract:

This paper develops a new model for studying requirements planning in multistage production–inventory systems. We first characterize how most industrial planning systems work, and we then develop a mathematical model to capture some of the key dynamics in the planning process. Our approach is to use a model for a single production stage as a building block for modeling a network of stages. We show how to analyze the single-stage model to determine the production smoothness and stability for a production stage and the inventory requirements. We also show how to optimize the tradeoff between production capacity and inventory for a single stage. We then can model the multistage supply chain using the single stage as a building block. We illustrate the multistage model with an industrial application, and we conclude with some thoughts on a research agenda.

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