Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling
Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2013.
| Main Authors: | , |
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| Other Authors: | |
| Format: | Thesis |
| Language: | eng |
| Published: |
Massachusetts Institute of Technology
2013
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| Online Access: | http://hdl.handle.net/1721.1/81110 |
| _version_ | 1826203390115315712 |
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| author | Wu, Cindy (Cindy Hsin-ying) González Duhart Muñoz de Cote, José Antonio |
| author2 | Bruce C. Arntzen. |
| author_facet | Bruce C. Arntzen. Wu, Cindy (Cindy Hsin-ying) González Duhart Muñoz de Cote, José Antonio |
| author_sort | Wu, Cindy (Cindy Hsin-ying) |
| collection | MIT |
| description | Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2013. |
| first_indexed | 2024-09-23T12:35:49Z |
| format | Thesis |
| id | mit-1721.1/81110 |
| institution | Massachusetts Institute of Technology |
| language | eng |
| last_indexed | 2024-09-23T12:35:49Z |
| publishDate | 2013 |
| publisher | Massachusetts Institute of Technology |
| record_format | dspace |
| spelling | mit-1721.1/811102019-04-12T21:39:49Z Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling Wu, Cindy (Cindy Hsin-ying) González Duhart Muñoz de Cote, José Antonio Bruce C. Arntzen. Massachusetts Institute of Technology. Engineering Systems Division. Massachusetts Institute of Technology. Engineering Systems Division. Engineering Systems Division. Thesis (M. Eng. in Logistics)--Massachusetts Institute of Technology, Engineering Systems Division, 2013. Cataloged from PDF version of thesis. Includes bibliographical references (p. 51-52). In the agrochemical industry, companies are challenged with an extreme seasonality in demand driven by the crops' growing cycles. Therefore, balancing supply with such fluctuating demand has been a struggle for most companies due to their capacity constraints. One way to accommodate the demand is to stock enough inventory ahead of the peak seasons, while the other is to increase the production capacity so that the companies can react to the changing demand more quickly. However, either alternative comes at a significant cost. This paper examines the optimal mix of production capacity and inventory for a company to meet customers' demand at the highest net present value (NPV) of operating assets value add (OAVA). We use a multi-period, multi-stage, multi-product mixed integer linear optimization model to determine the best combination of resources. Viable resource options include stocking inventory ahead of the peak seasons, enhancing output through overtime, outsourcing production activities to a third party, and acquiring new assets for a particular production stage. The results show that the optimal OAVA comes from a combination of all these viable resources. Additionally, the master production schedule, the resulting inventory levels, and the recommended timings for external resources and asset acquisition are important takeaways from our model. They serve not only as the guidance of the company's day-to-day operations, but also as the quantitative analysis necessary to communicate with stakeholders across different functional teams with potentially conflicting interests. by Cindy (Hsin-ying) Wu and José Antonio González Duhart Muñoz de Cote. M.Eng.in Logistics 2013-09-24T19:43:31Z 2013-09-24T19:43:31Z 2013 2013 Thesis http://hdl.handle.net/1721.1/81110 858279065 eng M.I.T. theses are protected by copyright. They may be viewed from this source for any purpose, but reproduction or distribution in any format is prohibited without written permission. See provided URL for inquiries about permission. http://dspace.mit.edu/handle/1721.1/7582 52 p. application/pdf Massachusetts Institute of Technology |
| spellingShingle | Engineering Systems Division. Wu, Cindy (Cindy Hsin-ying) González Duhart Muñoz de Cote, José Antonio Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title | Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title_full | Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title_fullStr | Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title_full_unstemmed | Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title_short | Modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| title_sort | modeling the tradeoff between inventory and capacity to optimize return on assets in production scheduling |
| topic | Engineering Systems Division. |
| url | http://hdl.handle.net/1721.1/81110 |
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