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A Dynamic Model for Requirements Planning with Application to Supply Chain Optimization

Author

Listed:
  • Stephen C. Graves

    (Massachusetts Institute of Technology, Cambridge, Massachusetts)

  • David B. Kletter

    (Booz, Allen & Hamilton Inc., New York, New York)

  • William B. Hetzel

    (Merck & Co., Inc., Whitehouse Station, New Jersey)

Abstract

This paper develops a new model for studying requirements planning in multistage production-inventory systems. We first characterize how most industrial planning systems work, and we then develop a mathematical model to capture some of the key dynamics in the planning process. Our approach is to use a model for a single production stage as a building block for modeling a network of stages. We show how to analyze the single-stage model to determine the production smoothness and stability for a production stage and the inventory requirements. We also show how to optimize the tradeoff between production capacity and inventory for a single stage. We then can model the multistage supply chain using the single stage as a building block. We illustrate the multistage model with an industrial application, and we conclude with some thoughts on a research agenda.

Suggested Citation

  • Stephen C. Graves & David B. Kletter & William B. Hetzel, 1998. "A Dynamic Model for Requirements Planning with Application to Supply Chain Optimization," Operations Research, INFORMS, vol. 46(3-supplem), pages 35-49, June.
    • Handle: RePEc:inm:oropre:v:46:y:1998:i:3-supplement-3:p:s35-s49
    DOI: 10.1287/opre.46.3.S35
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    References listed on IDEAS

    as
    1. Stephen C. Graves, 1996. "A Multiechelon Inventory Model with Fixed Replenishment Intervals," Management Science, INFORMS, vol. 42(1), pages 1-18, January.
    2. Leroy B. Schwarz, 1989. "A Model for Assessing the Value of Warehouse Risk-Pooling: Risk-Pooling Over Outside-Supplier Leadtimes," Management Science, INFORMS, vol. 35(7), pages 828-842, July.
    3. Stephen C. Graves, 1986. "A Tactical Planning Model for a Job Shop," Operations Research, INFORMS, vol. 34(4), pages 522-533, August.
    4. Peter L. Jackson, 1988. "Stock Allocation in a Two-Echelon Distribution System Or "What to Do Until Your Ship Comes In"," Management Science, INFORMS, vol. 34(7), pages 880-895, July.
    Full references (including those not matched with items on IDEAS)

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