IE 5551
Spring 2011
Production Planning and Inventory Control
Course objectives: This course will provide you with an introduction to methods for managing
production, inventory, and distribution systems. Topics covered include demand forecasting,
capacity planning, facility location, production planning and scheduling, inventory control, and
supply chain coordination. The objective of the course is to familiarize you with quantitative
models that can be used to make decisions in each of these areas. Special emphasis will be given
to the link between operational issues and strategic objectives regarding cost, responsiveness,
flexibility, product variety, and customer differentiation, among others. We will also discuss the
implications of various emerging technologies, business practices, and government regulations.
Prerequisites: An introductory course in probability and statistics is required. An introductory
course in linear programming is highly recommended. Knowledge of Microsoft Excel is
assumed.
Instructor: Professor Saif Benjaafar; ME 2104; 626-7239; saif@umn.edu
Teaching assistant: Xi Chen, ME L123, 624-5867; chen1644@umn.edu
Texts: Factory Physics by Wallace Hopp and Mark Spearman, Irwin/McGraw-Hill, Third
Edition, 2007, The Goal by Eliyahu M. Goldratt and Jeff Cox, North River Press, Second
Edition, 1992 and Lean Thinking by James P. Womack and Daniel T. Jones, Free Press, 2003.
The texts will be supplemented with handouts and assorted papers from recent literature and
other textbooks.
Website: Lecture notes, homework, and homework solutions will be posted (whenever possible)
on the following site: www.me.umn.edu/education/courses/ie5551
Office hours: Saif: Thursdays 1:30 - 3:30 (or by appointment); Xi: Tuesdays: 10:00-12:00 (or by
appointment)
Homework: Homework will be assigned regularly and will be due a week from the assignment
date (unless instructed otherwise). Homework solutions will be either distributed in class or
posted on the web. In addition, each student (in a team of 2) will be assigned a paper for in-class
presentation and critique. All students are required to provide a half page typed summary of each
presented paper. Summaries are due the day of the corresponding presentation.
Exams: Two exams, one in class (tentatively scheduled for week 8) and one during finals week.
The second exam will not be comprehensive.
Paper presentations: Each week, we will have a paper (or a book) assigned for reading and
presentation in class. The papers and the two books have been carefully selected to supplement
lectures, to illustrate emergent concepts, or to document industry practices. Each student needs to
sign up for one of the papers listed below. For your assigned paper, you will be responsible to
prepare a professional looking 10 to 15 minute presentation. There will be an additional 10 to 15
minutes for questions and class discussion. In addition to summarizing the main ideas in the
paper (assume everyone has read it), your role as a presenter is to provide a critical assessment,
describing both the usefulness of the concepts described and their limitations. More importantly,
your role is to engage and lead the class in a lively discussion. For this purpose, your last slide
should consist of a list of open-ended questions to ask from the rest of the class. In preparing
your presentation, feel free to provide additional background or perspective (this may require
additional research on your part) or to draw on your own experience.
Group Projects: You may work in groups of 2 or 3. Topic and scope of the project is flexible.
Three types of projects are possible (1) problem solving, (2) case studies, and (3) reviews. In a
“problem-solving” project, you would address a production and inventory control problem (either
specific to a particular setting or generic) and provide a solution in the form, for example, of a
mathematical model, a computer model, or via statistical analysis of actual data. In a “case study”
project, you would consider a specific firm and document its operations, managerial practices, or
its use of certain technologies. In a “review project”, you would provide an in-depth survey of
practices in an industry, the usage of a certain technology or a management principle in practice,
or a review of academic research on a particular topic.
Every year, there is a theme selected for the projects. Students are encouraged, but not required,
to choose project topics consistent with the theme. This year’s theme is “low carbon footprint
supply chains.”
A two page proposal is due by the end of the fifth week. The proposal should describe the topic,
preliminary work carried out so far, and assignment of project duties among team members.
Project presentations will be scheduled during the last week of classes. Project presentations will
be 15 minutes in length followed by 5 minutes of questions and discussion. Written reports will
be due on the last day of classes. The final report must be typed. You are encouraged to schedule
individual meetings with me throughout the semester to discuss progress on your project.
Grading: Final grades will be assigned based on the following breakdown: Exam 1: 25%, Exam
2: 25%, HWK: 20%, group project: 20% (5% oral presentation; 15% written report), paper
presentation 5%, paper summaries 5%. Late assignments will not be accepted.
Re-grades: You may submit an assignment or an exam for a re-grade within two weeks of its
return date. Re-grade requests are not accepted after this time limit. The requests must be
accompanied by a written explanation of why you feel the original grading was inaccurate.
Schedule of lecture topics: The following is a tentative schedule of lecture topics.
Week 1
Week 2
Week 3
Introduction to Production Planning and Inventory Control
Inventory Control – Deterministic Demand
Inventory Control – Stochastic Demand
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Week 14
Week 15
Inventory Control – Stochastic Demand
Inventory Control – Stochastic Demand
Inventory Control – Time Varying Demand
Inventory Control – Multiple Echelons
Demand Forecasting
Demand Forecasting
Production Planning and Scheduling
Production Planning and Scheduling
Managing Manufacturing Operations
Managing Manufacturing Operations
Managing Manufacturing Operations
Project Presentations
Discussion papers: The following is the list of papers for in-class presentation and discussion.
Papers are available for download via the library website (www.lib.umn.edu).
Week 2
Week 3
Week 4
Week 5
Week 6
Week 7
Week 8
Week 9
Week 10
Week 11
Week 12
Week 13
Fisher, M. L., “What is the Right Supply Chain for Your Product,” Harvard
Business Review, 75, 2, 105-116, 1997.
Magretta, J., “The Power of Virtual Integration: An Interview with Dell
Computer's Michael Dell,” Harvard Business Review, 76, 2, 73-84, 1998.
Ferdows, K., M. Lewis and J. D. Machuca, “Rapid Fire Fulfillment,” Harvard
Business Review, 82, 11, 94-102, 2004.
Feitzinger, E. and H. Lee, “Mass Customization at Hewlett-Packard: The Power
of Postponement,” Harvard Business Review, 75, 1, 116-121, 1997.
Lee, H., Padmanabhan, V. and S. Whang, “The Bullwhip Effect in Supply
Chains,” Sloan Management Review, 75, 2, 93-102, 1997.
The Carbon Trust, “Carbon Footprints in the Supply Chain: The next Step for
Business,” Technical Report, The Carbon Trust, www.carbontrust.co.uk, 2007.
Lakenan, B., D. Boyd and E. Frey, “Cisco and the Perils of Outsourcing,”
Business and Strategy, 24, September–October, 31–50, 2002.
Chopra, S. and M. Sodhi “Looking for the RFID Bang from the RFID Buck,”
Supply Chain Management Review, 11, 34-41, 2007.
Womack, J. P. and D. T. Jones, Lean Thinking, Free Press, 2003.
Chopra, S. and J. Van Mieghem, “Which e-Business is Right for your Supply
Chain?” Supply Chain Management Review, 4, 3, 32-40, 2000.
Decoding the DNA of the Toyota Production System, Harvard Business Review,
77, 9, 96-106, 1999.
The Goal by Eliyahu M. Goldratt and Jeff Cox, North River Press, Second
Edition, 1992
Additional Resources
Other recommended textbooks: The following texts offer additional discussion of material
related to our course.
Introductory
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Production and Operations Analysis by Steve Nahmias, Fifth Edition, Irwin, 2007
Decision Systems for Inventory Management and Production Planning by Edward Silver,
David Pyke, and Rein Peterson, Third Edition, John Wiley, 1997
Operations Strategy by Jan Van Mieghem, Dynamic Ideas, 2008
Supply Chain Management by Sunil Chopra and Peter Meindl, Prentice Hall, Second
Edition, 2004
Operations Rules by David Simchi-Levi, MIT Press, 2010.
Designing and Managing the Supply Chain by David Simchi-Levi, Philip Kaminski and
Edith Simchi-Levi, McGraw-Hill, Second Edition, 2003
Matching Supply with Demand: An Introduction to Operations Management by Gerard
Cachon and Christian Terwiesch, McGraw Hill, 2005
The Resilient Enterprise: Overcoming Vulnerability for Competitive Advantage by Yossi
Sheffi, MIT Press, 2005
Streamlined: 14 Principles for Building & Managing the Lean Supply Chain by
Mandyam Srinivasan, Southwestern Educational Publications, 2004
The Toyota Way: Fourteen Management Principles from the World's Greatest
Manufacturer, by Jeffrey Liker, McGraw-Hill, 2004
Advanced
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Foundation of Inventory Theory by Paul Zipkin, McGraw-Hill, 2000
Stochastic Models of Manufacturing Systems by John Buzacott and George
Shanthikumar, Prentice-Hall, 1993
Inventory Control by Sven Axsater, Kluwer, Second Edition, 2006
Stochastic Inventory Theory by Evan Porteus, Stanford University Press, 2010
Related magazines and journals: The following are selected journals and magazines that
publish articles in the areas of production, inventory and supply chain management
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Harvard Business Review
Supply Chain Management Review
APICS Magazine
Sloan Management Review
Interfaces
Manufacturing and Service Operations Management
Management Science
Operations Research
IIE Transactions
Production and Operations Management
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European Journal of Operational Research
Useful Web sites: The following websites are rich in content related to the topics of our course
and contain links to other relevant websites
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www.factory-physics.com
www.scmr.com
www.ascet.com
www.mhhe.com/omc
www.ascet.com
www.apics.org
www.poms.org
www.informs.org
www.lin56.com
http://faculty.fuqua.duke.edu/operations_management/links.htm
www.ie.umn.edu/cscr
http://beergame.mit.edu/