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Multi-Item Production Planning--An Extension of the HMMS Rules

Author

Listed:
  • Gary L. Bergstrom

    (Putnam Management Company, Boston, Massachusetts)

  • Barnard E. Smith

    (Professor, Thayer School of Engineering, Dartmouth College)

Abstract

The Linear Decision Rules (LDR) proposed by Holt, Modigliani, Muth, and Simon for the production planning problem determine an optimum plan in terms of an aggregate production rate and work force level. The criteria of the LDR assume we wish to make decisions so as to minimize costs over a specified time horizon, given estimates of future aggregate demand. This paper extends the LDR to a multi-item formulation (MDR) which solves directly for the optimum sales, production, and inventory levels for individual items in future periods. To remove the restriction of specified demand, revenue curves are estimated for each item in each time period. The MDR model then seeks a solution to maximize profit for the firm over the time horizon by an application in a firm producing a line of electric motors. The results of the MDR are compared to management's proposed plan and some important differences are detected.

Suggested Citation

  • Gary L. Bergstrom & Barnard E. Smith, 1970. "Multi-Item Production Planning--An Extension of the HMMS Rules," Management Science, INFORMS, vol. 16(10), pages 614-629, June.
    • Handle: RePEc:inm:ormnsc:v:16:y:1970:i:10:p:b614-b629
    DOI: 10.1287/mnsc.16.10.B614
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    Cited by:

    1. Kim, DaeSoo & Lee, Won J., 1998. "Optimal joint pricing and lot sizing with fixed and variable capacity," European Journal of Operational Research, Elsevier, vol. 109(1), pages 212-227, August.
    2. Chiu, Singa Wang & Pai, Fan-Yun & Wu, Wen Kuei, 2013. "Alternative approach to determine the common cycle time for a multi-item production system with discontinuous deliveries and failure in rework," Economic Modelling, Elsevier, vol. 35(C), pages 593-596.
    3. Jaya Singhal & Kalyan Singhal, 2008. "A Noniterative Algorithm for the Linear-Quadratic Profit-Maximization Model for Smoothing Multiproduct Production," INFORMS Journal on Computing, INFORMS, vol. 20(2), pages 169-178, May.
    4. Chiu, Yuan-Shyi Peter & Huang, Chao-Chih & Wu, Mei-Fang & Chang, Huei-Hsin, 2013. "Joint determination of rotation cycle time and number of shipments for a multi-item EPQ model with random defective rate," Economic Modelling, Elsevier, vol. 35(C), pages 112-117.
    5. Abhijit Upasani & Reha Uzsoy, 2008. "Incorporating manufacturing lead times in joint production-marketing models: A review and some future directions," Annals of Operations Research, Springer, vol. 161(1), pages 171-188, July.

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