Vlerick Leuven Gent Management School, University of Gent, Faculty of Economics and Business Administration
Operations Management. Crossing borders and boundaries: the changing role of operations: papers from the 7th International Conference of the European Operations Management Association, Ghent, Belgium, 4-7 June 2000 pages:174-181
Two extreme ordering systems are represented by level scheduling and order-up-to policies. They both incur significant costs: in level scheduling they are mainly due to higher inventory holding costs and in order-up-to scenarios, additional costs result from the need to rapidly ramp production both up and down. Moreover, order-up-to policies are know to create variance amplification or Bullwhip Effect. In this paper, we present a generic replenishment rule against the background of total cost minimisation (inventory holding and production switching costs), that succeeds in creating smooth production order patterns according to a pre-specified level of responsiveness.