Planning Production and Inventories in the Extended Enterprise

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1 Planning Production and Inventories in the Extended Enterprise

2 International Series in Operations Research & Management Science Volume 151 Series Editor Frederick S. Hillier Stanford University, CA, USA Special Editorial Consultant Camille C. Price Stephen F. Austin State University, TX, USA For other volumes:

3 Karl G. Kempf Pinar Keskinocak Reha Uzsoy Editors Planning Production and Inventories in the Extended Enterprise A State of the Art Handbook, Volume 1 ABC

4 Editors Karl G. Kempf Intel Corporation 5000 W. Chandler Blvd. MS CH3-10 Chandler, Arizona 85226, USA Pinar Keskinocak Georgia Institute of Technology School of Industrial & Systems Engineering Ferst Drive NW., Atlanta Georgia USA Reha Uzsoy Edward P. Fitts Department of Industrial and Systems Engineering North Carolina State University Raleigh, NC USA ISSN ISBN e-isbn DOI / Springer New York Dordrecht Heidelberg London Library of Congress Control Number: c Springer Science+Business Media, LLC 2011 All rights reserved. This work may not be translated or copied in whole or in part without the written permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY 10013, USA), except for brief excerpts in connection with reviews or scholarly analysis. Use in connection with any form of information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed is forbidden. The use in this publication of trade names, trademarks, service marks, and similar terms, even if they are not identified as such, is not to be taken as an expression of opinion as to whether or not they are subject to proprietary rights. Printed on acid-free paper Springer is part of Springer Science+Business Media (

5 Contents 1 Preface... 1 Karl G. Kempf, Pinar Keskinocak, and Reha Uzsoy 2 The Historical Foundations of Manufacturing Planning and Control Systems Kenneth N. McKay 3 Advanced Planning and Scheduling Systems: The Quest to Leverage ERP for Better Planning Irfan M. Ovacik 4 The Transition to Sustainable Product Development and Manufacturing Robert C. Carlson and Dariush Rafinejad 5 Uncertainty and Production Planning Stephen C. Graves 6 Demand Forecasting Problems in Production Planning Jonathan R.M. Hosking 7 Production Capacity: Its Bases, Functions and Measurement Salah E. Elmaghraby 8 Data in Production and Supply Chain Planning Laura Dionne and Karl G. Kempf 9 Financial Uncertainty in Supply Chain Models Aliza Heching and Alan King 10 Field-Based Research on Production Control Kenneth N. McKay v

6 vi Contents 11 Collaborative Supply Chain Management Feryal Erhun and Pinar Keskinocak 12 Sequencing Strategies and Coordination Issues in Outsourcing and Subcontracting Operations Tolga Aydinliyim and George L. Vairaktarakis 13 Inventory Management: Information, Coordination, and Rationality Özalp Özer 14 Pricing, Variety, and Inventory Decisions for Product Lines of Substitutable Items Bacel Maddah, Ebru K. Bish, and Brenda Munroe 15 Managing Perishable and Aging Inventories: Review and Future Research Directions Itir Z. Karaesmen, Alan Scheller-Wolf, and Borga Deniz 16 Optimization Models of Production Planning Problems Hubert Missbauer and Reha Uzsoy 17 Aggregate Modeling of Manufacturing Systems Erjen Lefeber and Dieter Armbruster 18 Robust Stability Analysis of Decentralized Supply Chains Yanfeng Ouyang and Carlos Daganzo 19 Simulation in Production Planning: An Overview with Emphasis on Recent Developments in Cycle Time Estimation Bruce E. Ankenman, Jennifer M. Bekki, John Fowler, Gerald T. Mackulak, Barry L. Nelson, and Feng Yang 20 Simulation-Optimization in Support of Tactical and Strategic Enterprise Decisions Juan Camilo Zapata, Joesph Pekny, and Gintaras V. Reklaitis Author Index Subject Index...643

7 Acknowledgements The process by which these volumes came to fruition has been a long one, and we are grateful to many different people for their support, advice and contributions. First among these are the contributing authors without them, there would be no book, and we are deeply grateful to them for bearing with our repeated requests for materials and revisions while providing the high-quality contributions worthy of these volumes. The many reviewers who gave their time and effort to help improve the chapters are also gratefully acknowledged. Thanks are also due to Professor F. Hillier, the Editor of this Series, for supporting the project, and to Gary Folven, under whose guidance the project took shape, and who sustained us through the first 4 years until his well-deserved retirement. His many contributions to operations research over a long and distinguished publishing career will stand for a long time. Neil Levine and Matthew Amboy of Springer saw the volumes through production, nudging the editorial team when necessary and exhibiting resourcefulness and patience above and beyond the call of duty. Thanks are also due to Carrie Brooks of North Carolina State University for preparing the list of authors for indexing at very short notice. An undertaking of this magnitude and duration would simply not be possible without a collegial, mutually supporting editorial team. It has been a privilege to work together on this project; we have all learnt from each other and from the authors who have contributed, and are grateful to have had this opportunity to work with some of the best in our field. Finally, we would like to thank our families, who have had to put up with late nights and grumpy mornings over the duration of the project, and without whose support and understanding our lives would be much poorer in many ways. vii

8

9 Contributors Bruce E. Ankenman Department of Industrial Engineering and Management Sciences, Northwestern University, 2145 Sheridan Rd., Evanston, IL 60208, USA, Dieter Armbruster Department of Mathematics, Arizona State University, Tempe, AZ , USA, Tolga Aydinliyim Decision Sciences Department, Charles H. Lundquist College of Business 1208, University of Oregon Eugene, OR , USA, Jennifer M. Bekki Department of Engineering, Arizona State University at the Polytechnic Campus, 7231 E. Sonoran Arroyo Mall, Room 230, Mesa, AZ 85212, USA, Ebru K. Bish Grado Department of Industrial and Systems Engineering (0118), 250 Durham Hall, Virginia Tech, Blacksburg, VA 24061, USA, Robert C. Carlson Management Science and Engineering Department, Stanford University, Stanford, CA , USA Carlos Daganzo Department of Civil and Environmental Engineering, Institute of Transportation Studies, University of California, Berkeley, CA 94720, USA Borga Deniz The Joseph W. Luter, III School of Business Christopher Newport University Newport News, VA 23606, USA, Laura Dionne Intel Corporation, Hillsboro, OR, USA Salah E. Elmaghraby North Carolina State University, Raleigh, NC , USA, Feryal Erhun Department of Management Science and Engineering, Stanford University Stanford, CA , USA, John Fowler Department of Industrial Engineering, Arizona State University, PO Box , Tempe AZ , USA, Stephen C. Graves MIT, 77 Massachusetts Avenue, E62-579, Cambridge MA , USA, ix

10 x Contributors Aliza Heching IBM Research Division, T. J. Watson Research Center, 1101 Kitchawan Road, Yorktown Heights, NY 10598, USA, Jonathan R. M. Hosking IBM Research Division, T. J. Watson Research Center, 1101 Kitchawan Road, Yorktown Heights, NY 10598, USA, Itir Z. Karaesmen Kogod School of Business, American University, 4400 Massachusetts Avenue NW, Washington DC 20016, Karl G. Kempf Intel Corporation, 5000 W. Chandler Blvd., MS CH3-10, Chandler, Arizona 85226, USA, Pinar Keskinocak School of Industrial and Systems Engineering, Georgia Institute of Technology Atlanta, GA , USA, Alan King IBM Research Division, T. J. Watson Research Center, 1101 Kitchawan Road, Yorktown Heights, NY 10598, USA, Erjen Lefeber Department of Mechanical Engineering, Eindhoven University of Technology, PO Box 513, Eindhoven, The Netherlands, Gerald T. Mackulak Department of Industrial Engineering, Arizona State University, PO Box , Tempe AZ , USA, Bacel Maddah Engineering Management Program, American University of Beirut, Beirut , Lebanon, Kenneth N. McKay Department of Management Sciences, University of Waterloo, Waterloo, ON, Canada, Hubert Missbauer Department of Information Systems, Production and Logistics Management, University of Innsbruck, Universitätstrasse 1,5 Innsbruck A-6020, Austria, Brenda Munroe Hannaford Bros., 145 Pleasant Hill Rd, Scarborough, ME 04074, USA, Barry L. Nelson Department of Industrial Engineering & Management Sciences, Northwestern University, 2145 Sheridan Road, Room C250, Evanston, IL , USA, Yanfeng Ouyang Department of Civil and Environmental Engineering, University of Illinois at Urbana-Champaign, Urbana, IL 61801, USA, Irfan M. Ovacik Intel Corporation, 6505 W. Chandler Blvd., Chandler, AZ 85226, USA, Özalp Özer The University of Texas at Dallas, School of Management, Office: SOM 3.412, 800 West Campbell Road, Richardson, Texas , Joesph Pekny College of Engineering, Purdue University, West Lafayette, IN 47907, USA,

11 Contributors xi Dariush Rafinejad Management Science and Engineering Department, Stanford University, Stanford, CA , USA, Gintaras V. Reklaitis Burton and Kathryn Gedge Distinguished Professor of Chemical Engineering, Purdue University, West Lafayette, IN , USA, Alan Scheller-Wolf Tepper School of Business Carnegie Mellon University Pittsburgh, PA 15215, USA, Reha Uzsoy Edward P. Fitts Department of Industrial and Systems Engineering, 300 Daniels Hall, Campus Box 7906, North Carolina State University, Raleigh, NC , USA, George L. Vairaktarakis Department of Operations, Weatherhead School of Management Case Western Reserve University Euclid Avenue Cleveland, OH , USA, Feng Yang Industrial and Management Systems Engineering, West Virginia University, PO Box 6070, Morgantown, WV , USA, Juan Camilo Zapata Eli Lilly & Co., Indianaplois, IN, zapata juan

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