Production Inventory NetworksPresentation Transcript
Production Inventory Networks: Perspectives and Recent Advances
Industrial & Systems Engineering Division
Department of Mechanical Engineering
University of Minnesota
Presented at Chinese Academy of Sciences, June 16, 2007
Benjaafar, S. and M. ElHafsi, “Production and Inventory Control of an ATO System with Multiple Customer Classes,” Management Science , 51 , 2006
Benjaafar, S., Y. Li and D. Xu, “Demand Allocation in Systems with Multiple Inventory Locations and Multiple Demand Sources,” M&SOM , forthcoming, 2007
Gayon, J. P., S. Benjaafar and F. de Véricourt, “Using Imperfect Demand Information in Production-Inventory Systems with Multiple Demand Classes,” M&SOM , forthcoming, 2007
Benjaafar, S., William L. Cooper and J. S. Kim, “On the Benefits of Pooling in Production-Inventory Systems,” Management Science , 51 , 548-565, 2005
Benjaafar, S., M. Elhafsi and F. de Véricourt, “Demand Allocation in Multi-Product, Multi-Facility MTS Systems,” Management Science , 50 , 1431–1448, 2004
Some Recent Papers
Benjaafar, S., E. Elahi and K. Donohue, “Outsourcing via Service Quality Competition,” Management Science , 53 , 241-259, 2007.
Benjaafar, S., J. S. Kim and N. Vishwanadham, “On the Effect of Product-Variety in Production-Inventory Systems,” Annals of Operations Research , 126 , 71-101, 2004
Gupta, D. and S. Benjaafar, “Make-to-order, Make-to-stock, or Delay Product Differentiation? - A Common Framework for Modeling and Analysis,” IIE Transactions , 36 , 529-546, 2004
Benjaafar, S., M. ElHafsi, C. Y. Lee and W. Zhou, “Optimal Control of Assembly Systems with Multiple Stages and Multiple Demand Classes,” Working Paper, 2006
Benjaafar, S., W. L. Cooper and S. Mardan, “Production-Inventory Systems with Imperfect Advance Demand Information and Due-Date Updates,” Working Paper, 2006
Some Recent Papers (Continued…)
Examples of production-inventory systems
Issues in design, analysis and control
Multi-stage assembly systems
Systems with imperfect advance demand information
Ongoing and future work
Production & Inventory Systems
A Production-Inventory System Production facility Finished-goods inventory Customer orders Raw Materials Customer shipments Production orders
Tight coupling of production & inventory
Limited production capacity, items produced one unit at a time
Variability in both demand and production times
Supply lead times are affected by congestion at the production system
Production and inventory treated separately
Capacity constraints are frequently ignored
Supply leadtimes are not affected by congestion
How much inventory should we keep (should we produce to order or to stock)?
When should we place a production order and for how much?
When should we initiate production and for how long?
What is the impact of system parameters?
A Series System Raw Materials Production orders Customer orders Production orders Production orders Customer shipments Supply orders Supply orders
Where should we keep inventory and how
How should we coordinate production across
Where should we invest in capacity and in variability reduction?
A Distribution System Raw Materials Customer orders from location 1 Customer orders from location 2 Customer orders from location N
How much inventory to stock of each product (which product to make to order and which to make to stock)?
How should priorities be assigned to different products?
What is the impact of inventory consolidation?
An Assemble-to-Order System Product 1 Product N Product 2 Production facilities Components
How much of each component to stock?
How should we coordinate the production of different components?
How should shared components be allocated?
What is the impact of various parameters?
A Multi-Stage Assembly System
Benjaafar et al. (MS, 2005; AOR, 2004): Impact of inventory pooling in a distribution system
Benjaafar et al. (MS, 2006): Optimal control of ATO systems
Benjaafar et al. (MS, 2004; MSOM 2007): Demand allocation in a network with multiple production facilities/inventory locations
Benjaafar et al. (M&SOM, 2007): Optimal control of systems with ADI
Benjaafar et al. (IIE Transactions, 2004): MTS versus MTO systems
Benjaafar et al. (MS, 2007): Competition among MTS suppliers
Benjaafar et al. (AOR 2004, MS 2005) Raw Materials Customer orders from location 1 Customer orders from location 2 Customer orders from location N
Benjaafar and Gupta (IIE Transactions, 2004) Raw Materials Customer orders Customer shipments Make-to-stock segment Make-to-order segment
Benjaafar et al. (MS, 2004; MSOM 2007)
Benjaafar and ElHafsi (MS 2006) Production facilities Components
Benjaafar et al. (MS, 2007) Competing suppliers A buyer that allocates demand
Benjaafar et al. (MSOM, 2007) Orders are announced Demand leadtime process Orders are due
Benjaafar et al. (2007): Multi-stage assembly systems with multiple stages with multiple classes
Gayon et al. (2006): Systems with imperfect advance demand information
Benjaafar et al. (2006): Systems with imperfect advance demand information and due-date update
Papers Related to this Talk
Optimal Control of Multi-Stage Assembly Systems with Multiple Demand Classes (Joint work with Mohsen Elhafsi, Larry Zhou and Chung-Yee Lee )
A Multi-Stage Assembly System
Assembly permeates most manufacturing and multi-stage assembly is a feature of most manufactured products
Modeling, analysis, and control of assembly systems is notoriously difficult
Few exact analytical results and the structure of the optimal policy is largely unknown
“ Little is known about the forms of optimal policies for multi-period models. The research to date mostly assumes particular policy types. It would be valuable to learn more about truly optimal policies. Even partial characterizations would be interesting. Also, better heuristic policy forms would be useful.”
--Song and Zipkin (2003)
Demands for different items (components and sub-assemblies) are correlated
Production and order fulfillment depends on the availability of multiple items
Production leadtimes of different items can be different
Costs of different items can be different
What can we say about the structure of optimal policies?
What is the benefit of using optimal policies instead of common heuristics such as static base-stock policies?
Are there simple but effective heuristics that can serve as substitutes to optimal policies?
Multiple items (components & intermediates) progressively assembled into a single product
Each item can have multiple predecessors and a single successor
Each item is produced (assembled) on an independent production facility
Demand for the end item arises from n customer classes