Applying Rolling Schedule on Multi-Period, Multi- Product Production Planning Considering of Safety Stock
Date Issued
2014
Date
2014
Author(s)
Lin, Chun-Yen
Abstract
Cost management is important to generate higher profit for companies in intense competitive environments. Inventory management is especially vital for manufacturers, and a good inventory policy will not only influence cost but also customer service. While customer service levels will rise, it will also cause huge management costs. However, less inventory will easily generate a higher probability of backlog. Production planning provides factories a method to effectively plan the production units under limited capacity and meanwhile calculate the best inventory level each period to minimize total costs. In the past study of production planning, demand levels are provided and most of them consider the possibility of shortage. For example, a food company is examined in this study, where future demand forecasting is based on real sales data with a rolling schedule applied to the model. Besides this, to lower the probability of shortages, while establishing a model of production planning we consider the importance of safety stock, design two-stage penalty mechanism, basic penalty cost and extra penalty cost. Considering different cost items in this study, we implement the model and analyze the impact by sensitive analysis as well, and conclude as following paragraph: 1. Under a two-stage penalty mechanism, factories can effectively plan production schedule and make better decisions based on tradeoffs between holding inventory and backlog. 2. With the increase of safety stock, total cost and basic penalty costs will rise at an increasing rate. However, safety stock has no influence on backlog. 3. The adjustment of service level only has a minor impact on total costs. While the service rate moved from 75% to 85%, it shows a great improvement on backlog, but no further changes happen if the rate advances to 95%. 4. With the rise of basic penalty cost, both total cost and holding cost will increase, but total cost increase at a decreasing rate. On the other hand, change of basic penalty cost has no relation to backlog.
Subjects
Production Planning
Safety Stock
Rolling Schedule
Backlog
Service Level
Two-Stage Penalty
Type
thesis
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