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dc.contributor.authorHedenstierna, CPT
dc.contributor.authorDisney, SM
dc.date.accessioned2019-09-10T09:09:40Z
dc.date.issued2018-04-14
dc.description.abstractCompanies tend to set their master production schedule weekly, even when producing and shipping on a daily basis—the term for this is staggered deliveries. This practice is common even when there is no marginal cost of setting a new schedule. We argue that the practice is sound for companies that use the ubiquitous order-up-to (OUT) policy to control production of products with a significant capacity cost. Under these conditions, the length of the order cycle (time between schedule updates) has a damping effect on production, while a unit (daily) order cycle can cause significant capacity costs. We call this the capacity cost trap. Developing an analytical model based on industrial evidence, we derive capacity and inventory costs under the staggered OUT policy, showing that for this policy there is an optimal order cycle possibly greater than unity. To improve on this solution, we consider three approaches to smoothing: either levelling within the cycle, deferring excess production or idling to future cycles via a proportional OUT policy, or increasing the length of the cycle. By deriving exact cost expressions we compare these approaches, finding that smoothing by employing the proportional OUT policy is sufficient to avoid the capacity cost trap.en_GB
dc.description.sponsorshipNorwegian Research Councilen_GB
dc.description.sponsorshipBIA programmeen_GB
dc.identifier.citationVol. 201, pp. 149 - 162en_GB
dc.identifier.doi10.1016/j.ijpe.2018.04.008
dc.identifier.urihttp://hdl.handle.net/10871/38626
dc.language.isoenen_GB
dc.publisherElsevieren_GB
dc.rights.embargoreasonUnder embargo until 14 October 2019 in compliance with publisher policyen_GB
dc.rights© 2018. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/  en_GB
dc.subjectInventoryen_GB
dc.subjectOrder-up-to policyen_GB
dc.subjectReorder perioden_GB
dc.subjectOvertime costen_GB
dc.titleAvoiding the capacity cost trap: Three means of smoothing under cyclical production planningen_GB
dc.typeArticleen_GB
dc.date.available2019-09-10T09:09:40Z
dc.identifier.issn0925-5273
dc.descriptionThis is the author accepted manuscript. the final version is available from Elsevier via the DOI in this recorden_GB
dc.identifier.journalInternational Journal of Production Economicsen_GB
dc.rights.uri https://creativecommons.org/licenses/by-nc-nd/4.0/  en_GB
dcterms.dateAccepted2018-04-10
rioxxterms.versionAMen_GB
rioxxterms.licenseref.startdate2018-04-14
rioxxterms.typeJournal Article/Reviewen_GB
refterms.dateFCD2019-09-10T09:07:14Z
refterms.versionFCDAM
refterms.panelCen_GB


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© 2018. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/  
Except where otherwise noted, this item's licence is described as © 2018. This version is made available under the CC-BY-NC-ND 4.0 license: https://creativecommons.org/licenses/by-nc-nd/4.0/