CONSTRAINED INVENTORY RULES FOR PRODUCTION SMOOTHING
Abstract
Production smoothing means planning production levels for a factory that cut down the peaks and build up the valleys in translating sales into production. The term is usually used for a factory that manufactures to finished goods inventory; one of the principal reasons for the existence of this inventory is that it allows smoothing. When sales are low, the factory maintains its production level and builds up inventory, from which it will deliver when sales are at a peak. If inventory decisions are to be made sensibly, they must be consistent with aggregate factory plans; at the same time, aggregate plans must take into account how total production and inventory will be distributed among individual products. A method is presented which illustrates how it is possible, by limiting the extent of a constraint, to make nearly optimal decisions in a very simple way. Cost comparisons between the optimal and near-optimal methods are shown in graphs. (Author)
Document Details
- Document Type
- Technical Report
- Publication Date
- Dec 01, 1960
- Accession Number
- AD0255125
Entities
People
- Peter R. Winters
Organizations
- Carnegie Institute of Technology