Conceptual Life Cycle

Conceptual Life Cycle

Raw Material Acquisition

We consider a single-item production system (henceforward the firm) in which the production process boils down to converting a certain raw material type into a finished product type. First of all, the firm has the obligation to satisfy a demand stream for finished products. When it is a downstream plant in a vertically integrated conglomerate, the firm may be force-fed an incoming stream of internally supplied raw material; and in all situations, the firm can acquire raw material from an external supplier. Also, when in-house production is no longer the most cost-effective means to satisfy demands, the firm may acquire finished products from an external source (Bauer, 2008).

In each period, the firm has to make decisions on the production level, the quantity of raw material to be acquired from the external supplier, and the level of outsourcing; i.e., the quantity of finished products to be acquired from an external source. While making these decisions, the firm has to make sure that enough raw materials exist for production and all demands are satisfied without delay. We study the multi-period deterministic production planning problem for such a firm.

The successful study of the aforementioned problem will have far-reaching practical implications because many production systems, ranging from oil refineries to paper mills, can be thought of as converting a single raw material type into a single finished product type. When a firm is a midor downstream plant in a vertically integrated conglomerate, it is very probable that the amount of raw material shipped to it is at the discretion of both the headquarters and Mother Nature and therefore is beyond its own control. To capture the spirit of this phenomenon, we treat a portion of the raw material as being (exogenously) internally supplied. While the headquarters may try to match the supply with the demand, it may be hard to synchronize perfectly at that level, especially when the lead time is long or the supply-side capacity is limited (Bello, 2008).

Manufacturing Process

There are six classes of secondary processes used to produce produces. These processes are:

Casting and molding: processes that cause molten or liquid materials to enter a mold where it solidifies before being extracted. Making an ice cube is a simple example of casting.

Forming: processes that cause a material to take the shape of a die using an external force. Forming aluminum foil over a pie is a simple forming process.

Separating: processes that give a material size and shape by removing excess material. Cutting hair or a lawn are examples of simple separating processes.

Conditioning: processes that change material properties using heat, pressure, or chemical action. Baking cookies is an example of a conditioning process.

Assembling: processes that are used to temporarily or permanently fasten or bond pieces together. Sewing a dress is an example of an assembly process.

Finishing: processes that protect or beautify a surface by converting the surface or applying a coating. Painting a lawnchair is an example of a finishing ...