Production planning and inventory management in a telecommunication industry

This paper reports on a number of methodological issues in an experimental study carried out for the Production Planning Department of a medium-size telecommunication company in the Netherlands. This company assembles exchanges for voice- and data-transmission which are sold to large organizations (commercial as well as non-profit organizations such as universities, hospitals, etc.) all over the world. The objective of the study was to carefully review production planning and inventory control rules and, in particular, to quantify the possible reductions of stock levels as a result of certain well-defined actions, to be initiated by the responsible management. The purpose of this paper is to show how simple analytical and simulation techniques were used, in a complicated practical situation, to study the consequences of a number of actions on the logistics of the production process and, more in particular, on the inventory levels, including the amount of work-in-process (henceforth abbreviated as WIP).