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Deterministic Approximations to Co-Production Problems with Service Constraints and Random Yields

Author

Listed:
  • Gabriel R. Bitran

    (Sloan School of Management, Massachusetts Institute of Technology, Cambridge, Massachusetts 02139)

  • Thin-Yin Leong

    (Department of Decision Sciences, National University of Singapore, Republic of Singapore)

Abstract

We study production planning problems where multiple item categories are produced simultaneously. The items have random yields and are used to satisfy the demands of many products. These products have specification requirements that overlap. An item originally targeted to satisfy the demand of one product may be used to satisfy the demand of other products when it conforms to their specifications. Customers' demand must be satisfied from inventory 100\alpha % of the time. We formulate the problem with service constraints and provide near-optimal solution to the problem with fixed planning horizon. We also propose simple heuristics for the problem solved with a rolling horizon. Some of the heuristics performed very well over a wide range of parameters.

Suggested Citation

  • Gabriel R. Bitran & Thin-Yin Leong, 1992. "Deterministic Approximations to Co-Production Problems with Service Constraints and Random Yields," Management Science, INFORMS, vol. 38(5), pages 724-742, May.
    • Handle: RePEc:inm:ormnsc:v:38:y:1992:i:5:p:724-742
    DOI: 10.1287/mnsc.38.5.724
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    Citations

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    Cited by:

    1. Ng, Tsan Sheng, 2013. "Robust regret for uncertain linear programs with application to co-production models," European Journal of Operational Research, Elsevier, vol. 227(3), pages 483-493.
    2. de Sampaio, Raimundo J.B. & Wollmann, Rafael R.G. & Vieira, Paula F.G., 2017. "A flexible production planning for rolling-horizons," International Journal of Production Economics, Elsevier, vol. 190(C), pages 31-36.
    3. Suzanne, Elodie & Absi, Nabil & Borodin, Valeria & van den Heuvel, Wilco, 2020. "A single-item lot-sizing problem with a by-product and inventory capacities," European Journal of Operational Research, Elsevier, vol. 287(3), pages 844-855.
    4. Arthur Hsu & Yehuda Bassok, 1999. "Random Yield and Random Demand in a Production System with Downward Substitution," Operations Research, INFORMS, vol. 47(2), pages 277-290, April.
    5. Suzanne, Elodie & Absi, Nabil & Borodin, Valeria, 2020. "Towards circular economy in production planning: Challenges and opportunities," European Journal of Operational Research, Elsevier, vol. 287(1), pages 168-190.
    6. Jing Wu & Dan Zhang & Yang Yang & Gongshu Wang & Lijie Su, 2022. "Multi-Stage Multi-Product Production and Inventory Planning for Cold Rolling under Random Yield," Mathematics, MDPI, vol. 10(4), pages 1-21, February.
    7. Han, Guanghua & Dong, Ming & Liu, Shaoxuan, 2014. "Yield and allocation management in a continuous make-to-stock system with demand upgrade substitution," International Journal of Production Economics, Elsevier, vol. 156(C), pages 124-131.
    8. Ge, Yanming & Xu, Yifan & Dai, Yue, 2010. "Overbooking with bilateral transference in parallel flights," International Journal of Production Economics, Elsevier, vol. 128(2), pages 577-585, December.
    9. Caner TaskIn, Z. & Tamer Ünal, A., 2009. "Tactical level planning in float glass manufacturing with co-production, random yields and substitutable products," European Journal of Operational Research, Elsevier, vol. 199(1), pages 252-261, November.
    10. Hsieh, Chung-Chi & Lai, Hsing-Hua, 2020. "Pricing and ordering decisions in a supply chain with downward substitution and imperfect process yield," Omega, Elsevier, vol. 95(C).
    11. Hongmin Li & Stephen C. Graves & Woonghee Tim Huh, 2014. "Optimal Capacity Conversion for Product Transitions Under High Service Requirements," Manufacturing & Service Operations Management, INFORMS, vol. 16(1), pages 46-60, February.
    12. Huang, Yiqian & Ge, Yanming & Zhang, Xiandong & Xu, Yifan, 2013. "Overbooking for parallel flights with transference," International Journal of Production Economics, Elsevier, vol. 144(2), pages 582-589.
    13. Ying-Ju Chen & Brian Tomlin & Yimin Wang, 2013. "Coproduct Technologies: Product Line Design and Process Innovation," Management Science, INFORMS, vol. 59(12), pages 2772-2789, December.
    14. Jin, Minyue & Li, Baoyong & Xiong, Yu & Chakraborty, Ratula & Zhou, Yu, 2023. "Implications of coproduction technology on waste management: Who can benefit from the coproduct made of leftover materials?," European Journal of Operational Research, Elsevier, vol. 307(3), pages 1248-1259.
    15. Lingxiu Dong & Panos Kouvelis & Xiaole Wu, 2014. "The Value of Operational Flexibility in the Presence of Input and Output Price Uncertainties with Oil Refining Applications," Management Science, INFORMS, vol. 60(12), pages 2908-2926, December.
    16. Deishin Lee, 2012. "Turning Waste into By-Product," Manufacturing & Service Operations Management, INFORMS, vol. 14(1), pages 115-127, January.
    17. Brian Tomlin & Yimin Wang, 2008. "Pricing and Operational Recourse in Coproduction Systems," Management Science, INFORMS, vol. 54(3), pages 522-537, March.
    18. Lee, Deishin & Tongarlak, Mustafa Hayri, 2017. "Converting retail food waste into by-product," European Journal of Operational Research, Elsevier, vol. 257(3), pages 944-956.
    19. H. S. Yan, 2000. "Hierarchical Stochastic Production Planning with Delay Interaction," Journal of Optimization Theory and Applications, Springer, vol. 104(3), pages 659-689, March.
    20. Vidal-Carreras, Pilar I. & Garcia-Sabater, Jose P. & Coronado-Hernandez, Jairo R., 2012. "Economic lot scheduling with deliberated and controlled coproduction," European Journal of Operational Research, Elsevier, vol. 219(2), pages 396-404.
    21. Tseytlin, Yulia & Heese, H. Sebastian, 2019. "Allocation under a general substitution structure," European Journal of Operational Research, Elsevier, vol. 277(2), pages 492-506.
    22. Tao Lu & Ying‐Ju Chen & Brian Tomlin & Yimin Wang, 2019. "Selling Co‐Products through a Distributor: The Impact on Product Line Design," Production and Operations Management, Production and Operations Management Society, vol. 28(4), pages 1010-1032, April.

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