A General Model of Production: Theory and Application
CALIFORNIA UNIV BERKELEY OPERATIONS RESEARCH CENTER
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A theoretical model of a general production process is constructed. A production process is regarded as a network of jointly operating, interrelated activities which use system exogenous inputs of goods and services to produce outputs. The production model displays explicitly the intermediate product transfers between activities and incorporates the time-varying aspects of production directly. The primitive elements which are taken to be common to all production processes are the activity production functions and the flows of products, goods and services. To enhance clarity and rigor, the model is developed axiomatically, i.e., properties on the primitive elements which are conjectured to be true in order to facilitate the theory are identified. The general model extends previous axiomatic production models used in economic theory. Specifically, laws of production and Shephards Duality Theorem are proved using axioms of the general model. Moreover, the general model provides guidelines as to what entails a satisfactory model of production so that it may be used to study models and solutions of specific production planning problems. To illustrate, the general model is used to systematically analyze a heuristic solution proposed by Leachman and Boysen for the problem of multi-project resource-use planning and to show how their approach can be extended and improved. Keywords Production networks Shephardss duality Laws of diminishing returns Aggregation Materials requirement planning Critical path method Production function.
- Manufacturing and Industrial Engineering and Control of Production Systems