Effects of different types of imperfect advance demand information in production systems

Abstract

ABSTRACT One strategy to reduce inventories and increase on-time delivery is to use Advanced Demand Information (ADI) in which customers place their orders ahead of their due date. ADI can be divided into perfect or imperfect information. Under perfect ADI, customers send accurate demand information to the suppliers, specifying exact quantities and due dates. Under imperfect ADI, customer orders’ quantities and/or due dates may change over time or order cancellations may occur. This research focuses on the effects of three types of imperfect ADI on different production systems: changing due dates, changing order quantities, and cancellations. Three different model variations simulate a pull system, a push system, and a hybrid system. We found that only cancellations and changing order quantities had a significant effect on system performance. Generally, the pull and the hybrid system behaved similarly and proved to be more suitable for managing imperfect ADI than the push system.