Planning Production and Inventories in the Extended Enterprise International Series in Operations Research & Management Science Volume 151 SeriesEditor FrederickS.Hillier StanfordUniversity,CA,USA SpecialEditorialConsultant CamilleC.Price StephenF.AustinStateUniversity,TX,USA Forothervolumes: http://www.springer.com/series/6161 Karl G. Kempf Pinar Keskinocak Reha Uzsoy (cid:2) (cid:2) Editors Planning Production and Inventories in the Extended Enterprise A State of the Art Handbook, Volume 1 ABC Editors KarlG.Kempf PinarKeskinocak IntelCorporation GeorgiaInstituteofTechnology 5000W.ChandlerBlvd. SchoolofIndustrial MSCH3-10 &SystemsEngineering Chandler,Arizona85226,USA FerstDriveNW.,765 [email protected] 30332-0205AtlantaGeorgia USA [email protected] RehaUzsoy EdwardP.FittsDepartment ofIndustrialandSystemsEngineering NorthCarolinaStateUniversity Raleigh,NC27695-7906 USA [email protected] ISSN0884-8289 ISBN978-1-4419-6484-7 e-ISBN978-1-4419-6485-4 DOI10.1007/978-1-4419-6485-4 SpringerNewYorkDordrechtHeidelbergLondon LibraryofCongressControlNumber:2010938800 (cid:3)c SpringerScience+BusinessMedia,LLC2011 Allrightsreserved.Thisworkmaynotbetranslatedorcopiedinwholeorinpartwithoutthewritten permission of the publisher (Springer Science+Business Media, LLC, 233 Spring Street, New York, NY10013, USA),except forbrief excerpts inconnection with reviews orscholarly analysis. Usein connectionwithanyformofinformationstorageandretrieval,electronicadaptation,computersoftware, orbysimilarordissimilarmethodologynowknownorhereafterdevelopedisforbidden. Theuseinthispublicationoftradenames,trademarks,servicemarks,andsimilarterms,eveniftheyare notidentifiedassuch,isnottobetakenasanexpressionofopinionastowhetherornottheyaresubject toproprietaryrights. Printedonacid-freepaper SpringerispartofSpringerScience+BusinessMedia(www.springer.com) Contents 1 Preface......................................................................... 1 KarlG.Kempf,PinarKeskinocak,andRehaUzsoy 2 TheHistoricalFoundationsofManufacturingPlanning andControlSystems ......................................................... 21 KennethN.McKay 3 AdvancedPlanningandSchedulingSystems:TheQuest toLeverageERPforBetterPlanning ...................................... 33 IrfanM.Ovacik 4 TheTransitiontoSustainableProductDevelopmentand Manufacturing................................................................ 45 RobertC.CarlsonandDariushRafinejad 5 UncertaintyandProductionPlanning ..................................... 83 StephenC.Graves 6 DemandForecastingProblemsinProductionPlanning .................103 JonathanR.M.Hosking 7 Production Capacity: Its Bases, Functions andMeasurement.............................................................119 SalahE.Elmaghraby 8 DatainProductionandSupplyChainPlanning..........................167 LauraDionneandKarlG.Kempf 9 FinancialUncertaintyinSupplyChainModels...........................185 AlizaHechingandAlanKing 10 Field-BasedResearchonProductionControl.............................205 KennethN.McKay v vi Contents 11 CollaborativeSupplyChainManagement.................................233 FeryalErhunandPinarKeskinocak 12 Sequencing Strategies and Coordination Issues in OutsourcingandSubcontractingOperations .............................269 TolgaAydinliyimandGeorgeL.Vairaktarakis 13 InventoryManagement:Information,Coordination,and Rationality.....................................................................321 O¨zalpO¨zer 14 Pricing,Variety,andInventoryDecisionsforProduct LinesofSubstitutableItems.................................................367 BacelMaddah,EbruK.Bish,andBrendaMunroe 15 ManagingPerishableandAgingInventories:Reviewand FutureResearchDirections..................................................393 ItirZ.Karaesmen,AlanScheller-Wolf,andBorgaDeniz 16 OptimizationModelsofProductionPlanningProblems.................437 HubertMissbauerandRehaUzsoy 17 AggregateModelingofManufacturingSystems..........................509 ErjenLefeberandDieterArmbruster 18 RobustStabilityAnalysisofDecentralizedSupplyChains..............537 YanfengOuyangandCarlosDaganzo 19 SimulationinProductionPlanning:AnOverviewwith Emphasis on Recent Developments in Cycle Time Estimation.....................................................................565 Bruce E. Ankenman,Jennifer M. Bekki, John Fowler, GeraldT.Mackulak,BarryL.Nelson,andFengYang 20 Simulation-Optimizationin Support of Tacticaland StrategicEnterpriseDecisions ..............................................593 JuanCamiloZapata,JoesphPekny,andGintarasV.Reklaitis AuthorIndex........................................................................629 SubjectIndex.......................................................................643 Acknowledgements Theprocessbywhichthesevolumescametofruitionhasbeenalongone,andwe are grateful to many different people for their support, advice and contributions. First among these are the contributingauthors– withoutthem, there would be no book, and we are deeply grateful to them for bearing with our repeated requests formaterialsandrevisionswhileprovidingthehigh-qualitycontributionsworthyof thesevolumes.Themanyreviewerswhogavetheirtimeandefforttohelpimprove thechaptersarealsogratefullyacknowledged. ThanksarealsoduetoProfessorF.Hillier,theEditorofthisSeries,forsupport- ingtheproject,andtoGaryFolven,underwhoseguidancetheprojecttookshape, andwhosustainedusthroughthefirst4yearsuntilhiswell-deservedretirement.His manycontributionstooperationsresearchoveralonganddistinguishedpublishing careerwillstandforalongtime.NeilLevineandMatthewAmboyofSpringersaw thevolumesthroughproduction,nudgingtheeditorialteamwhennecessaryandex- hibitingresourcefulnessandpatienceaboveandbeyondthecallofduty.Thanksare alsoduetoCarrieBrooksofNorthCarolinaState Universityforpreparingthelist ofauthorsforindexingatveryshortnotice. 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 worktogetheronthisproject;wehavealllearntfromeachotherandfromtheau- thorswho have contributed,and are gratefulto have had this opportunityto work withsomeofthebestinourfield. 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 supportandunderstandingourliveswouldbemuchpoorerinmanyways. vii Contributors Bruce E. Ankenman DepartmentofIndustrialEngineeringandManagement Sciences,NorthwesternUniversity,2145SheridanRd.,Evanston,IL60208,USA, [email protected] Dieter Armbruster Departmentof Mathematics, Arizona State University, Tempe,AZ85287-1804,USA,[email protected] Tolga Aydinliyim Decision Sciences Department, Charles H. Lundquist CollegeofBusiness1208,UniversityofOregonEugene,OR97403-1208,USA, [email protected] JenniferM.Bekki DepartmentofEngineering,ArizonaStateUniversityatthe PolytechnicCampus,7231E.SonoranArroyoMall,Room230,Mesa,AZ85212, USA,[email protected] EbruK.Bish GradoDepartmentofIndustrialandSystemsEngineering(0118), 250DurhamHall,VirginiaTech,Blacksburg,VA24061,USA,[email protected] RobertC.Carlson ManagementScienceandEngineeringDepartment,Stanford University,Stanford,CA94305-4026,USA CarlosDaganzo DepartmentofCivilandEnvironmentalEngineering,Instituteof TransportationStudies,UniversityofCalifornia,Berkeley,CA94720,USA BorgaDeniz TheJosephW.Luter,IIISchoolofBusinessChristopherNewport UniversityNewportNews,VA23606,USA,[email protected] LauraDionne IntelCorporation,Hillsboro,OR,USA SalahE.Elmaghraby NorthCarolinaStateUniversity,Raleigh,NC27695-7906, USA,[email protected] FeryalErhun DepartmentofManagementScienceandEngineering,Stanford UniversityStanford,CA94305-4026,USA,[email protected] JohnFowler DepartmentofIndustrialEngineering,ArizonaStateUniversity,PO Box875906,TempeAZ85287-5906,USA,[email protected] StephenC.Graves MIT,77MassachusettsAvenue,E62-579,CambridgeMA 02139-4307,USA,[email protected] ix x Contributors Aliza Heching IBM Research Division, T. J. Watson Research Center, 1101 KitchawanRoad,YorktownHeights,NY10598,USA,[email protected] JonathanR.M.Hosking IBMResearchDivision,T.J.WatsonResearchCenter, 1101KitchawanRoad,YorktownHeights,NY10598,USA, [email protected] Itir Z. Karaesmen Kogod School of Business, American University, 4400 MassachusettsAvenueNW,WashingtonDC20016,[email protected] Karl G. Kempf Intel Corporation, 5000 W. Chandler Blvd., MS CH3-10, Chandler,Arizona85226,USA,[email protected] Pinar Keskinocak School of Industrial and Systems Engineering, Georgia InstituteofTechnologyAtlanta,GA30332-0205,USA,[email protected] AlanKing IBMResearchDivision,T.J.WatsonResearchCenter,1101Kitchawan Road,YorktownHeights,NY10598,USA,[email protected] ErjenLefeber DepartmentofMechanicalEngineering,EindhovenUniversityof Technology,POBox513,Eindhoven,TheNetherlands,[email protected] Gerald T. Mackulak Department of Industrial Engineering, Arizona State University,POBox875906,TempeAZ85287-5906,USA,[email protected] Bacel Maddah EngineeringManagementProgram, American University of Beirut,Beirut11072020,Lebanon,[email protected] Kenneth N. McKay Department of Management Sciences, University of Waterloo,Waterloo,ON,Canada,[email protected] HubertMissbauer DepartmentofInformationSystems,ProductionandLogistics Management,UniversityofInnsbruck,Universita¨tstrasse1,5InnsbruckA-6020, Austria,[email protected] BrendaMunroe HannafordBros.,145PleasantHillRd,Scarborough,ME04074, USA,[email protected] BarryL.Nelson DepartmentofIndustrialEngineering&ManagementSciences, Northwestern University, 2145 Sheridan Road, Room C250, Evanston, IL 60208-3119,USA,[email protected] YanfengOuyang DepartmentofCivilandEnvironmentalEngineering,University ofIllinoisatUrbana-Champaign,Urbana,IL61801,USA,[email protected] Irfan M. Ovacik Intel Corporation,6505 W. Chandler Blvd., Chandler, AZ 85226,USA,[email protected] O¨zalp O¨zer The University of Texas at Dallas, School of Management, Office:SOM 3.412,800West CampbellRoad,Richardson,Texas75080-3021, [email protected] JoesphPekny CollegeofEngineering,PurdueUniversity,West Lafayette,IN 47907,USA,[email protected]