TY - JOUR
T1 - Information inaccuracy
T2 - Implications for economic production scheduling
AU - Rohleder, Thomas R.
AU - Scudder, Gary D.
N1 - Funding Information:
‘This research was supported by the Alberta Energy Company, Natural Sciences and Engineering Research Council of Canada (Grant Number A1485), and the Dean’s Summer Research Fund at the Owen Graduate School of Management.
PY - 1995/11
Y1 - 1995/11
N2 - A number of articles have recently appeared proposing the use of NPV and similar economic scheduling performance measures. Much of this research has concentrated on developing methods to maximize NPV. However, it is assumed in almost all these studies that the cash flow information and cost rate parameters are all known with certainty. For confident use of NPV it would be beneficial to know the robustness of this measure to economic misspecification. This research study addresses the issue of economic information error by developing a simulation model of a jobshop that includes varying levels of information misspecification. The study considers a variety of time-based and economically oriented performance measures along with a number of classical and economic order-release and dispatch scheduling rules. Varying rates of shop utilization and due date tightness were also examined. The results show that NPV is relatively robust to information errors. Average errors must be of the magnitude of at least 40% before time-based measures such as mean flowtime and mean tardiness are financially preferable. At average error levels greater than 40%, the economic-based measures may be misguided by the poor economic information, making their schedules of less worth. However, with low utilization rates, many time-based measures are as good, or almost as good, as NPV in maximizing NPV with information error, even with low information error levels. Under such conditions, the use of the time-based measures may be preferable due to their simplicity.
AB - A number of articles have recently appeared proposing the use of NPV and similar economic scheduling performance measures. Much of this research has concentrated on developing methods to maximize NPV. However, it is assumed in almost all these studies that the cash flow information and cost rate parameters are all known with certainty. For confident use of NPV it would be beneficial to know the robustness of this measure to economic misspecification. This research study addresses the issue of economic information error by developing a simulation model of a jobshop that includes varying levels of information misspecification. The study considers a variety of time-based and economically oriented performance measures along with a number of classical and economic order-release and dispatch scheduling rules. Varying rates of shop utilization and due date tightness were also examined. The results show that NPV is relatively robust to information errors. Average errors must be of the magnitude of at least 40% before time-based measures such as mean flowtime and mean tardiness are financially preferable. At average error levels greater than 40%, the economic-based measures may be misguided by the poor economic information, making their schedules of less worth. However, with low utilization rates, many time-based measures are as good, or almost as good, as NPV in maximizing NPV with information error, even with low information error levels. Under such conditions, the use of the time-based measures may be preferable due to their simplicity.
KW - Economics
KW - Job-shop scheduling
KW - Simulation
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U2 - 10.1016/0925-5273(96)84205-8
DO - 10.1016/0925-5273(96)84205-8
M3 - Article
AN - SCOPUS:58149322057
SN - 0925-5273
VL - 42
SP - 51
EP - 66
JO - International Journal of Production Economics
JF - International Journal of Production Economics
IS - 1
ER -