The Simultaneous Planning of Production, Capacity, and Inventory in Seasonal Demand Environments

James R. Bradley and Bruce C. Arntzen
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James R. Bradley: The S.C. Johnson Graduate School of Management, Cornell University, Ithaca, New York 14853-6201
Bruce C. Arntzen: Global Supply Chain Associates, 6 Mockingbird Lane, Maynard, Massachusetts 01754-2254

Operations Research, 1999, vol. 47, issue 6, 795-806

Abstract: Manufacturing managers often address capacity and inventory decisions separately, thus ignoring the interaction between capacity and inventory within a manufacturing system. The separation of these two decisions can lead to an imbalance of capacity and inventory investment. We develop a model that simultaneously plans capacity investment, inventory investment, and the production schedule using return on assets as the objective to maximize. An algorithm is developed that optimizes a fractional objective function for a mixed-integer program. The model was applied at an electronics manufacturer and at a manufacturer of office supplies.

Keywords: production scheduling; planning; capacity and inventory planning; aggregate planning; inventory production; applications; capacity and inventory policies; programming/fractional; integer; mixed-integer; fractional (search for similar items in EconPapers)
Date: 1999
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Citations: View citations in EconPapers (30)

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