Manufacturers use production quotas to smooth and synchronize production. A Markov chain is used to quantify the effect of quota flexibility on overtime and inventory costs. This quantification allows to trade off these costs to find the optimal amount of quota flexibility. Quota flexibility is defined as the permitted amount and duration of deviations from the cumulative quota. The cost savings are specifically analysed as a function of the maximum allowed deviation amount from the cumulative quota for four policies. These example policies are the four permutations of two factors: whether or not backlogging is permitted; and whether or not actual production and the quota must be reconciled weekly. The model is applied to three automotive assembly plants and it is concluded that permitting modest flexibility in production quotas (of < 1 h of production) significantly reduces total cost.


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    Title :

    Quantifying the advantages of production quota flexibility in the automotive industry


    Additional title:

    Die Quantifizierung von Vorteilen der Produktionsquotenflexibilität in der Kraftfahrzeugindustrie


    Contributors:
    Inman, R.R. (author)

    Published in:

    Publication date :

    1995


    Size :

    15 Seiten, 8 Bilder, 1 Tabelle, 12 Quellen




    Type of media :

    Article (Journal)


    Type of material :

    Print


    Language :

    English






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