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Multi-period aggregate production planning in a news-vendor framework

Author

Listed:
  • K Kogan

    (Bar Ilan University)

  • V Portougal

    (University of Auckland)

Abstract

The paper focuses on the control decisions in the area of multi-period, aggregate production planning. The plan consists of a number of sequential planning periods stretching out to a particular time horizon. Owing to machine downtime, quality, supply, and maintenance problems, true productivity differs from the expected. Therefore, at the end of each planning period, the planner must have immediate feedback about production outcome. The results are analysed for variations from the plan (shortfalls or surpluses) and any differences are used to modify subsequent plans. The goal is to minimize the expected total costs including productivity, overtime as well as over- and under-production costs. Although the presented solution is generally not of base-stock type, a correspondence between it and the solution of the classical newsboy problem is revealed. This paper was developed during a consultation assignment in the food industry where the planning results were tested, and the case is presented.

Suggested Citation

  • K Kogan & V Portougal, 2006. "Multi-period aggregate production planning in a news-vendor framework," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 57(4), pages 423-433, April.
    • Handle: RePEc:pal:jorsoc:v:57:y:2006:i:4:d:10.1057_palgrave.jors.2602002
    DOI: 10.1057/palgrave.jors.2602002
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    References listed on IDEAS

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    1. Khouja, Moutaz, 1999. "The single-period (news-vendor) problem: literature review and suggestions for future research," Omega, Elsevier, vol. 27(5), pages 537-553, October.
    2. Hirofumi Matsuo, 1990. "A Stochastic Sequencing Problem for Style Goods with Forecast Revisions and Hierarchical Structure," Management Science, INFORMS, vol. 36(3), pages 332-347, March.
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    6. George R. Murray, Jr. & Edward A. Silver, 1966. "A Bayesian Analysis of the Style Goods Inventory Problem," Management Science, INFORMS, vol. 12(11), pages 785-797, July.
    7. Frank W. Ciarallo & Ramakrishna Akella & Thomas E. Morton, 1994. "A Periodic Review, Production Planning Model with Uncertain Capacity and Uncertain Demand---Optimality of Extended Myopic Policies," Management Science, INFORMS, vol. 40(3), pages 320-332, March.
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    Cited by:

    1. Kogan, Konstantin & Herbon, Avi, 2022. "Retailing under panic buying and consumer stockpiling: Can governmental intervention make a difference?," International Journal of Production Economics, Elsevier, vol. 254(C).

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