Letter to the Editor---Production Schedules Involving Cancellation and Obsolescence Risks

John E. Walsh
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John E. Walsh: Lockheed Aircraft Corporation, Burbank, California

Operations Research, 1959, vol. 7, issue 1, 123-126

Abstract: For some types of items that are to be manufactured, both cancellation of production and obsolescence of the product are important considerations. If a schedule that calls for too rapid a production of the item is used, a large loss (excess tooling costs, etc.) occurs when the manufacturing is cancelled prematurely. Conversely, if too slow a production schedule is used, a large loss in over-all product worth can arise because of the obsolescence, or nearness to obsolescence, of a substantial amount of the product. Thus selection of a suitable production schedule represents a compromise between the risk of cancellation and obsolescence. This note presents a method for deciding which schedule, among a given group of schedules, is preferable for the production of an item of the type considered.

Date: 1959
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