Timing production in LP models in a rolling schedule

We consider an arbitrary supply chain structure under demand uncertainty. We look at a setting where the supply chain planning is executed periodically and where the demand of end items in subsequent periods is stochastic. In contrast to other linear programming-based approaches, we assume constant planned lead times. In this paper we discuss the timing of production during the planned lead times of items. If production starts immediately, the work-in-process inventory costs are higher, but producing later will result in higher safety stocks. We look at the influence of the demand variation, the planned lead time of the items, the utilization rate of resources, and the added value when merging items, on the inventory costs. The results indicate that, for higher utilization rates, producing early is more suitable

An Integrated Approach for Supply Chain Tactical Planning and Cash Flow Valuation

Part 1: Smart Supply NetworksInternational audienceThis paper presents a methodology combining a flow optimization and a cost models in order to, simultaneously, realize a tactical planning of a productive system, and evaluate the financial performance of the proposed plans. The system addressed is a multi-site, multi-product supply chain structure with finite capacities of production, storage and transport. In order to model physical flow, we propose an optimization model taking into consideration all the physical system’s constraints. It calculates production and transport plans while maximizing demand satisfaction rate. Then, in order to financially evaluate the solution found by the optimization model, we propose a cost model using Activity Based Costing (ABC) as a valuation method using cost drivers mechanism. Finally, in order to couple both optimization and cost models in a global integrated model, we use an approach called PREVA for PRocess EVAluation, generally used to set up a supply chain’s management control system using financial and physical metrics