No abstract

Lead times impact the performance of the supply chain significantly. Although there is a large literature concerning queuing models for the analysis of the relationship between capacity utilization and lead times, and there is a substantial literature concerning control and order release policies that take lead times into consideration, there have been only few papers describing models at the aggregate planning level that recognize the relationship between the planned utilization of capacity and lead times. In this paper we provide an in-depth discussion of the state-of-the art in this literature, with particular attention to those models that are appropriate at the aggregate planning level.

Lead times impact the performance of the supply chain significantly. Although there is a large body of literature concerning queuing models for the analysis of the relationship between capacity utilization and lead times, and another body of work on control and order release policies that take lead times into consideration, there have been relatively few aggregate planning models that recognize the (nonlinear) relationship between the planned utilization of capacity and lead times. In this paper we provide an in-depth discussion of the state-of-the art in this area, with particular attention to those models that are appropriate at the aggregate planning level.

Deterioration and perishability constraints force organizations to carefully plan their production in cooperation with their supply chain partners up-and downstream. This is important because waiting times due to suboptimal planning give rise to increasing lead times and, consequently, to depreciation of parts and products while waiting and, thus, decreasing quality of items, so that, in the worst case, they cannot be used. Increased costs are only one problem. A more troubling aspect is unsatisfied customers waiting for their products or being concerned about quality. It is well known that reducing lot sizes leads to lower inventory holding costs, but also to increased setup costs. Therefore, lot size planning seeks to weigh the tradeoff of setup costs and costs of inventory holding. The limits of lifetimes of parts and products in the production process increase the complexity of planning, especially if setup times and costs are dependent on the sequence of items. We analyze lot sizing models with sequence-dependent setup times and costs extending them to depreciation effects.