Operations and Supply Chain Management Commons^™

Production Planning Using Evolving Demand Forecasts In The Automotive Industry, Hakan Yildiz, Scott Duhadway, Ram Narasimhan, Sriram Narayanan

Business Faculty Publications and Presentations

This paper considers an auto parts supplier who receives order release updates from its customers and revises its production plan for future periods on a weekly basis. The inaccuracy of the order releases causes significant costs in the form of premium expedited transportation, production overtime, and excess inventory. This setting provides a rich context for studying order release variance, because the supply chain has adopted a just-in-time (JIT) approach where ideal inventory levels are kept at zero. This leads to a high reliance on order release accuracy in order to manage production quantities. This paper presents an optimization model that …