Fall 2000

ME/IE 8773-8774

ON THE VALUE OF ADVANCE DEMAND INFORMATION IN MAKE-TO-STOCK PRODUCTION SYSTEMS

This talk is based on joint work with George Liberopoulos (University of Thessaly, Greece)
and Yves Dallery (Ecole Centrale Paris).
by

Fikri Karaesmen, Ph.D.
Assistant Professor
Laboratoire Productique Logistique
Ecole Centrale Paris
Grande Voie des Vignes
92295 Chatenay-Malabry Cedex
FRANCE

Wednesday, December 6, 2000
3:30-5:00 p.m.
Room 108 ME
Broadcast on UNITE Channel A

Coffee and cookies will be available in 152 ME following the seminar

This talk will summarize our recent work on integrating future demand information in production/inventory control mechanisms. Traditional production/inventory control frameworks do not take into account the availability of future demand information. In practice, however, this information is usually available in varying forms ranging from advance commitments and supply chain contracts to forecasts. Moreover, several industrial initiatives that will enable the availability of increased information, such as supply chain partnerships and information sharing technologies, are taking place. Yet the potential operational benefits of these initiatives are usually not very clear.

In order to gain insights into the integration of advance information in production control and its operational benefits, we restrict our attention to advance (and firm) customer commitments. We investigate the structure of optimal control policies for a discrete time make-to-stock queue and show that a simple class of policies perform nearly optimally. Focusing further on the properties of this class of policies, we then evaluate the benefits of advance information. This leads to particularly simple and appealing results on the value of advance information for the continuous time make-to-stock queue. We show, in general, that advance information can be extremely valuable and that a few key factors determine this value.

F. Karaesmen obtained a B.S. degree in Industrial Engineering from Middle East Technical University (METU) (Ankara, Turkey) and M.S. and Ph.D degrees in Industrial Engineering from Northeastern University (Boston, MA). He is currently an assistant professor at the "Laboratoire Productique Logistique" of Ecole Centrale in Paris. His recent research interests are in stochastic models of production/inventory systems (dynamic scheduling and stock allocation, optimal control of make-to-stock queues) and service systems (modeling and optimization of call centers and field services).

Informal Faculty Luncheon: Wednesday, December 6, 2000, 12:00 noon. A table has been reserved at McCormick's Restaurant, Radisson Hotel Metrodome. Prof. Karaesmen will be able to attend.