GOALI: Incorporating Nonlinear Phenomena into Production Planning Models

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This grant provides funding for research on means of integrating two critical aspects of production planning activity that have hitherto been performed separately using very different models: the planning of the time-phased release of work into factories using mathematical programming models, and the establishment of safety stock levels that guarantee a desired level of customer service while remaining feasible with respect to capacity constraints on the production resources. The aspect linking these two operations is the lead time, the time required for work released into the plant to emerge as finished product. It is well known that the amount and timing of work release determines lead times, due to its effect on resource utilization. The establishment of safety stock levels, on the other hand, requires knowledge of the lead time of the production facility replenishing that inventory. Historically the two problems have been pursued in isolation, but recent NSF-supported work at Purdue has for the first time allowed the development of release planning models that capture the effects of releases on lead times correctly. This provides a mechanism for linking the safety stock determination with the release planning in an integrated model. If successful, this research will lead to the development of new supply chain planning tools that will allow large supply chains involving complex manufacturing facilities to operate with substantially lowered inventory levels, substantially reducing costs without adversely affecting service levels. It will also contribute to a better understanding of the linkages between two research streams that have been treated as distinct areas with very different mathematical tools in the past.