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Section 1 Overview of Text

This document presents an overview of models for scheduling production, controlling inventory, forecasting demand, and modeling production systems. It is divided into four major topics: scheduling, inventory control, forecasting, and modeling production systems. Each topic contains multiple sections addressing various aspects of that topic, such as scheduling basics, inventory lot sizing, forecasting methods, and queueing models. The document emphasizes that models are abstractions of reality and have limitations, and stresses the importance of understanding a model's biases and intended scope before using it to solve real-world problems.

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maddy,borntorule
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23 views

Section 1 Overview of Text

This document presents an overview of models for scheduling production, controlling inventory, forecasting demand, and modeling production systems. It is divided into four major topics: scheduling, inventory control, forecasting, and modeling production systems. Each topic contains multiple sections addressing various aspects of that topic, such as scheduling basics, inventory lot sizing, forecasting methods, and queueing models. The document emphasizes that models are abstractions of reality and have limitations, and stresses the importance of understanding a model's biases and intended scope before using it to solve real-world problems.

Uploaded by

maddy,borntorule
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
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SECTION 1 January 5, 2017

1. OVERVIEW OF THIS TEXT


This text presents a series of models useful in scheduling production, controlling inventory,
forecasting demand, and modeling production systems. It is important to understand that a
model is an abstraction of reality. It is a set of assumptions about the state of the world that is
expressed mathematically. There is simply no way that a set of assumptions can completely
represent the real world. As you mature in your use of models to solve problems, you will
develop a sense of the limitations of models as well as a sense of their value as a tool to solve
real-world problems. Of particular importance is that you understand the biases of the model
you are using. All models are biased in some way. If you understand the biases of the model
you are using relative to the real world, you will be less apt to use it inappropriately. In addition,
models tend to be built to operate within a specific domain and for a specific purpose (or
application). If the parameters of the model are pushed beyond their intended domain, or the
model is applied to a situation that is not within its intended scope, the results may be
questionable.
This material in this text is collected in four major topics. Each part includes a number of
sections which address various aspects of the topic. Individual sections may or may not include
homework exercises to reinforce and further the knowledge gained from reading the section.

1.1 Part 1: Scheduling


This Part consists of three sections. Section 2 addresses the basics of machine scheduling.
Twelve basic problems are considered whose solutions can be used as the basis for more
advanced problems. Section 3 covers the traveling salesman problem which, in a job shop
scheduling context, relates to sequence dependent machine setup times. Finally, Section 4 is
concerned with heuristic solutions for large-scale traveling salesmen problems.

1.2 Part 2: Inventory Control


This Part consists of eleven sections. Section 5 covers general inventory system terms and
concepts. Section 6 deals with lot size scheduling under deterministic conditions and the so-
called Economic Order Quantity (EOQ) and Economic Manufacturing Quantity (EMQ) are
developed. Section 7 considers cases where quantity discounts are available for the EOQ model.
In Section 8 models with constraints on such things as the amount of floor space to store
inventory are considered.

The next set of sections in this part relax the assumption of deterministic demand as well as that
of deterministic reorder lead time. Section 9 presents a model to determine an appropriate
reorder to trigger a replenishment order for backorder and lost sales scenarios. In Section 10, the
assumption of an information system that provides continuous review of the inventory status is
changed to the more restrictive periodic review case. Section 11 addresses the single period
problem more commonly known as the News Vendor or News Boy problem.

Section 12 again assumes a known constant demand rate but considers the case where a single
production resource must produce a set of products. In this case, the sequence and duration of
production runs is the output of the model presented. In Section 13, a single product is again
assumed but the demand is no longer considered stationary. Instead a forecast of the upcoming

1.1
SECTION 1 January 5, 2017

horizon is used and an optimal approach to determine when to produce given some fixed setup
cost each time a production run is made.

The last two sections provide an overview of software systems to support production control,
inventory and scheduling is real systems including MRP and ERP systems (Section 14) and the
philosophy behind Just-in-Time production systems is described in Section 15.

1.3 Part 3: Forecasting


This Part consists of three sections. Section 16 describes adaptive forecasting methods including
Moving Average and Exponential Smoothing. Section 17 reviews the basics of fitting data using
regression and then discusses correlation and autocorrelation functions. Finally, Section 18
demonstrates the Forecasting Software to fit example data using regression and then adaptive
forecasting methods.

1.4 Part 4: Modeling Production Systems


This Part consists of a single section (19) that addresses Markovian queueing models of
production systems.

1.5 Appendices
Five appendices are provided. Appendix I is a reprint of paper published in APICS – The
Performance Advantage which describes a problem prevalent in American industry that is caused
by executive incentive systems. Appendix II is a Standard Normal table for convenience in
solving homework and test problems. Appendix III provides Leibnitz’s Formula for
differentiating an integral and Appendix IV shows a formula for computing the expected number
of stock outs (or lost sales) when the demand distributed can be reasonably assumed to be
Normally distributed. Finally, Appendix V describes five useful properties of the Exponential
distribution.

1.2

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