This paper explores a quantitative decision-making system for planning production, inventories and work-force in a multi-item production system.
The Multi-item Parametric Decision Rule (MPDR) model, which assumes the existence of two types of linear feed-back rules, one for work-force level and one for production rates, is basically an extension of the existing method of Parametric Production Planning (PPP) proposed by C.H. Jones. The MPDR model, however, explicitly considers the effect of manufacturing progress and other factors such as employee turn-over, difference in work-days between month etc., and it also provides decision rules for production rates of individual items.
First, the cost relations of the production system are estimated in terms of mathematical functions, and then decision rules for work-force level and production rates of individual items are establised based upon the estimated objective cost function. Finally, a direct search technique is used to find a set of parameters which minimizes the total cost of the objective function over a specified planning horizon, given estimates of future demands and initial values of inventories and work-force level.
As a case problem, a hypothetical decision rule is developed for a particular firm (truck assembly factory).