Simultaneous Capacity and Planned Lead Time Optimization

Klaus Altendorfer
Additional contact information
Klaus Altendorfer: University of Applied Sciences Upper Austria

Chapter Chapter 4 in Capacity and Inventory Planning for Make-to-Order Production Systems, 2014, pp 43-71 from Springer

Abstract: Abstract The literature on simultaneous capacity and inventory investment problems (see Chap. 2 ) shows that, especially for the MTS case, there are several contributions available, but for the MTO case, there is still a research gap about the influence of capacity investment on optimal planned lead time. A simultaneous approach to capacity and planned lead time setting is presented in this chapter based on costs for capacity, WIP at each stage, FGI, and backorders. This extends existing planned lead time approaches by introducing a distributed customer required lead time rather than applying a single value and a variable production lead time that can be optimized by investments. Furthermore, it extends existing capacity investment approaches by including a distributed customer required lead time and by rationing the work release, and therefore the inventory, with the application of planned lead times. First the simultaneous optimization problem is stated for a general setting before detailed results for a single- and a two-stage production system, assuming M/M/1 queues for the processing steps, are developed. For the two-stage production system consisting of M/M/1 queues and an exponentially distributed customer required lead time it is shown that only very little cost improvement can be gained by including a planned lead time for the upstream processing stage. This extends the findings of Yano (1987), Buzacott and Shanthikumar (1994), and Karaesmen et al. (2004) who analyze an MTO system with a constant customer required lead time. Furthermore, a large cost improvement potential is found when capacity investment and planned lead times are simultaneously optimized.

Keywords: Planned Lead Times; Simultaneous Capacity; Customer Required Lead Time; Simultaneous Optimization Problem; Investment Capacity (search for similar items in EconPapers)
Date: 2014
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:lnechp:978-3-319-00843-1_4

Ordering information: This item can be ordered from
http://www.springer.com/9783319008431

DOI: 10.1007/978-3-319-00843-1_4

Access Statistics for this chapter

More chapters in Lecture Notes in Economics and Mathematical Systems from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().