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Response Time Design in Integrated Order Processing/Production Systems

Author

Listed:
  • William S. Lovejoy

    (University of Michigan, Ann Arbor, Michigan)

  • Seungjin Whang

    (Stanford University, Stanford, California)

Abstract

We consider a single-product firm in which arriving orders are processed by an information processing system before being downloaded to the production system. The design problem is to choose the appropriate processing and control technologies for the information (production) systems, the decision variables being the speed with which these systems can process orders (products). Rapid systems are assumed to be more costly to operate than slower systems, and it is assumed that products can be inventoried, but information processing cannot. Longer information processing times incur greater delay costs, but provide benefits in the form of more advanced warning of upcoming demand to the production function. This paper is a first attempt to model this tradeoff. We describe a plausible set of conditions under which the information processing time will never exceed the production lead time in an optimal design. Conditions are also described that guarantee that the greatest marginal benefit, starting from a suboptimal system design, will be to invest in time reductions in the information processing, rather than the production, system. Performance measures are suggested that provide the appropriate incentives to integrate the information processing and production functions.

Suggested Citation

  • William S. Lovejoy & Seungjin Whang, 1995. "Response Time Design in Integrated Order Processing/Production Systems," Operations Research, INFORMS, vol. 43(5), pages 851-861, October.
    • Handle: RePEc:inm:oropre:v:43:y:1995:i:5:p:851-861
    DOI: 10.1287/opre.43.5.851
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    Citations

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    Cited by:

    1. Fangruo Chen, 2001. "Market Segmentation, Advanced Demand Information, and Supply Chain Performance," Manufacturing & Service Operations Management, INFORMS, vol. 3(1), pages 53-67, February.
    2. Ki Ling Cheung & Alex X. Zhang, 1999. "The impact of inventory information distortion due to customer order cancellations," Naval Research Logistics (NRL), John Wiley & Sons, vol. 46(2), pages 213-231, March.
    3. Fangruo Chen, 1999. "Decentralized Supply Chains Subject to Information Delays," Management Science, INFORMS, vol. 45(8), pages 1076-1090, August.
    4. Noel Watson & Yu-Sheng Zheng, 2005. "Decentralized Serial Supply Chains Subject to Order Delays and Information Distortion: Exploiting Real-Time Sales Data," Manufacturing & Service Operations Management, INFORMS, vol. 7(2), pages 152-168, May.
    5. Michael J. Fry & Roman Kapuscinski & Tava Lennon Olsen, 2001. "Coordinating Production and Delivery Under a (z, Z)-Type Vendor-Managed Inventory Contract," Manufacturing & Service Operations Management, INFORMS, vol. 3(2), pages 151-173, August.
    6. Saibal Ray & Shanling Li & Yuyue Song, 2005. "Tailored Supply Chain Decision Making Under Price-Sensitive Stochastic Demand and Delivery Uncertainty," Management Science, INFORMS, vol. 51(12), pages 1873-1891, December.
    7. Gunasekaran, Angappa & Ngai, Eric W.T., 2009. "Modeling and analysis of build-to-order supply chains," European Journal of Operational Research, Elsevier, vol. 195(2), pages 319-334, June.
    8. Yucesan, Enver & de Groote, Xavier, 2000. "Lead times, order release mechanisms, and customer service," European Journal of Operational Research, Elsevier, vol. 120(1), pages 118-130, January.

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