Article ID: | iaor19991581 |
Volume: | 46 |
Issue: | 3 |
Publication Date: | May 1998 |
Journal: | Operations Research |
Authors: | Graves Stephen C., Kletter David B., Hetzel William B. |
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.