HP Labs Technical Reports

Enterprise Modeling System: Inventory Exposure and Delivery Performance

Mujtaba, M. Shahid; Ritter, Robert

HPL-94-89

Keyword(s):

Abstract: Manufacturing systems performance measures such as inventory exposure and delivery performance are affected by multiple interacting factors including forecast accuracy, material lead times and production planning process times. The Enterprise Modeling System (EMS) developed at HP Labs, which utilizes a simulation model and data exploration and visualization techniques, was used to study how these factors affected the performance measures in HP's Computer Manufacturing organization. This report presents quantified graphical relationships between these factors. The results indicate that: a) committed inventory is strongly correlated to both forecast accuracy and part lead times, b) reducing maximum part lead times can mitigate the effect of under forecasting on backlog, and c) reducing planning process time, by itself, has very little effect on inventory levels and delivery performance. The recommended action leading to the most immediate benefits is to reduce the effect of long effective lead time among all the parts. This report includes an Executive Summary.

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