Experimental exploration of decision making in production-inventory system

Transcription

1 Experimenal exploraion of decision making in producion-invenory sysem Felicjan Rydzak 1, Agaa Sawicka 2 1 Cenre for Advanced Manufacuring Technologies, Wroclaw Universiy of Technology, ul. Lukasiewicza 5, Wroclaw, Poland Phone: / Fax: Faculy of Science and Engineering, Agder Universiy College NO-4876 Grimsad, Norway Phone: / Fax: Absrac. Despie availabiliy of advanced decision aids, manufacuring managers should maser basic conrol asks wihin producion sysems. Sill, here is subsanial evidence ha even highly educaed and experienced praciioners mismanage even very simple producion-invenory sysems. We repor an experimenal sudy invesigaing sraegies in a simple producioninvenory conrol ask. The sudy was conduced using an ineracive compuer simulaor. Consisen wih previous observaions, he subjecs failed o execue a saisfacory conrol in he firs rial. Mos, however, learned o manage he sysem as hey gained experience. Applicaion of single subjec experimenal design wih hink-aloud proocol and debriefing inerviews allowed o idenify sraegies followed by he subjecs. The paper repors on he key resuls of he sudy, discussing is implicaions for he producion managemen research and pracice. 1 Inroducion Producion-invenory conrol is fundamenal for effecive managemen of boh manufacuring process and manufacuring supply chain. Regardless of he complexiy of he relaionships wihin he producion-supply environmen, he main challenge is unchanged i.e., o have he righ number of righ producs a he righ place and ime. This is difficul because of he inheren delays in he flow of maerials, informaion and money, as well as ever changing and unpredicable demand [1, 2]. Over he las wo decades various sraegies and approaches have been proposed o improve decision making along a whole supply chain as well as a a paricular echelon. One line of research advocaes developmen of robus conrol algorihms o opimize he use of available informaion and consequenly improve he invenory

2 26 Felicjan Rydzak, Agaa Sawicka managemen. Towill [1] and Whie [3], for insance, applied conrol heory and more sophisicaed conrol algorihms, such as proporional, derivaive and inegral (PID), o reduce invenory level by 8% a resul especially desired in jus-in-ime (JIT) or maerial requiremens planning (MRP) echniques. The laes research invesigaes possibiliy of fuzzy logic conrol applicaion [4]. However, beer conrol algorihms are very ofen oo sophisicaed o be successfully incorporaed ino managerial pracice. Anoher line of research focuses on decision making processes in producionsupply sysems. Producion managemen games have been developed wih a pioneering Beer Game creaed by Jay W. Forreser a MIT in he beginning of 196s o creae virual producion managemen laboraories. These laboraories have been used ofen as raining aids [5, 6]. However, hey have also been applied in research. Experimenal resuls show ha mos people fail o conrol even overly simplisic sysems [7-11]. Forreser [12] and Serman [8] sugges ha people insead of developing a good undersanding of he sysem rely on an anchoring and adjusmen heurisic a rule ha sars wih a salien reference poin (anchor) and adjuss i o reach a final value; he problems occur because he adjusmens are insufficien. This paper repors on findings from an experimenal sudy on decision-making in a simulaion-based environmen called INVENT. The sudy invesigaed sraegies applied in a producion-invenory conrol ask. Consisen wih previous findings [7, 1], we observed ha people have difficulies in conrolling a very simplified producion-invenory sysem one echelon of he whole supply chain. While mos subjecs iniially used an erroneous anchoring and adjusmen heurisic, many successfully improved he rule afer a period of hands-on experience in managing he sysem. In decade when companies compee hrough heir supply chains [13] improving people s abiliy o effecively manage producion-invenory sysems becomes increasingly imporan. Our resuls sugges ha applicaions like INVENT may be a valuable aid in various raining programmes for boh sudens and praciioners of indusrial managemen. The paper is organized as follows: The nex secion discusses he design and mehodology of he experimen. Following, we presen he key findings. Finally, conclusions are drawn indicaing limiaions, implicaions and conribuions of he research. 2 Design and mehodology The experimenal sudy was conduced using a simulaion-based producion game called INVENT. The game was developed based on a Sysem Dynamics model [2]. The srucure of he model is presened in Fig. 1. The model consiss of hree secors: Producion and Invenory, Cusomer Orders, and Coss. In he Sysem Dynamics noaion recangle boxes represen accumulaions wihin he sysem in our case hey are socks of elemens in producion (Producion in Progress), sock of ready producs (Invenory) and coss incurred during a period of an experimen (Cumulaive Coss). Values of he accumulaions wihin he sysem are changed by flows (arrows wih valves) represening he movemen of maerials, informaion and

3 Experimenal exploraion of decision making in producion-invenory sysem 27 cos; for insance, Planned Producion indicaes informaion impulse ha sars producion process, Shipmen Rae indicaes shipmen of finished producs o he cusomers. Addiional variables specify cerain parameers of he model, e.g. producion lead ime (Manufacuring Time) equal o 4 weeks. Usually Sysem Dynamics models include also decision funcions specifying he way in which he maerial flows are conrolled. However, in his case ha par of he model was replaced by he direc decisions of he experimen subjecs. Producion and Invenory Planned Producion (PP) Producion in Progress (SL) Producion Rae Invenory (I) Shipmen Rae Manufacuring Time Previous Producion Sar Rae Change in Producion Cos Cumulaion Rae Cumulaive Coss Orders Level Cusomer Orders (CO) 5% variaion in cusomer orders Coss Change in Producion Uni Cos Invenory Uni Cos Cusomer Orders Fig. 1. The Sysem Dynamics model srucure of a simple producion-invenory sysem used in he ineracive learning environmen INVENT For he INVENT game, four differen decision-making inerfaces were designed. All four inerfaces conained a spreadshee like repor on he problem variables and provided complee informaion abou he curren and pas resuls. They differed in how explicily hey exposed he inheren manufacuring delay. The example shown in Fig. 2 presened he delay in he mos explici way by providing an animaed diagram of he producion-invenory sysem. The sudy was designed as a single subjec experimen [14] and involved 15 sudens aending MSc course in Managemen and Manufacuring Engineering a Wroclaw Universiy of Technology. Because of he applied design, each subjec aended he experimen individually. The subjecs ook on he role of a producion manager of one of he divisions of he ABC Manufacuring Co. A he sar of he experimen each subjec read he insrucions. The subjecs were asked o se weekly producion so o minimize coss of operaions. To accomplish his goal he invenory level should be mainained a he minimal level ( zero invenory ) bu simulaneously order losses should be avoided. Subjecs were informed of he saring value of cusomer order and ha hey

4 28 Felicjan Rydzak, Agaa Sawicka should expec he orders o follow a random walk wih +/-5% flucuaions and o have a one-ime, sep increase wihin he firs 1 of he 32 simulaed weeks. Fig. 2. The example of he ineracive learning environmen INVENT inerface Before playing INVENT subjecs filled in a prior-es knowledge quesionnaire. Nex, hey played INVENT hree imes. Each decision and all resuls were saved in a compuer log. During conducing he ask he subjecs were encouraged o commen on heir decisions ( hink-aloud proocol ). Afer each rial an inerview was conduced o elici self-evaluaion of he performance. A he end of he experimen each subjec filled in he pos-es quesionnaire and evaluaed he whole ask. 3 Findings The anchoring and adjusmen heurisic proposed by Serman [8] assumes ha, when conrolling invenories, he subjecs anchor heir decisions (O) in he imminen expeced losses (ExpL) and adjus for he invenory (I) and supply line (SL) discrepancies: * * O MAX[, ExpL ( I I ) ( SL SL )] (1) where indicaes he curren poin in ime and * indicaes he desired values. Based on regression analysis, Serman suggess ha poor invenory conrol may be aribued o he subjecs fixaion on he iniial invenory level and heir failure o accoun fully for he supply line [8, see pp ].

5 Experimenal exploraion of decision making in producion-invenory sysem 29 To evaluae performance of our subjecs, we compared heir resuls wih Serman s anchoring and adjusmen rule. Table 1 presens an overview of he subjecs invenories ogeher wih a reference invenory achieved when he anchoring and adjusmen heurisic (1) is followed correcly. In Serman s experimen, mismanagemen following he demand increase led o invenory flucuaions [8, see Fig. 4, p. 33]. In our experimen we also observe such flucuaions, especially in he 1s rial (see Table 1). However, o deermine wheher he subjecs indeed misapplied he anchoring and adjusmen heurisic proposed by Serman oher daa need o be also examined. Table 1. Invenory levels overview of he experimenal resuls. Grey, bold line racks he invenory level simulaed using Seraman s anchoring and adjusmen heurisic. Black colour is used o mark invenories of he individual subjecs DMI 1 DMI 2 DMI 3 DMI Trial Trial Trial When comparing he cumulaive coss, many of our subjecs ouperformed he heurisic heir cumulaive coss were lower han hose generaed when he heurisic-based decisions were simulaed. Furher analysis of he hink-aloud proocols suggesed ha mos successful subjecs did no follow he anchoring and adjusmen heurisic as proposed by Serman [8]. During he firs rial only one subjec conrolled he sysem compleely all he ime. His decision rule was anchored in he imminen expeced losses (represened

6 21 Felicjan Rydzak, Agaa Sawicka by he curren cusomer order level, CO) bu i did no involve explici adjusmens for invenory or supply line. The subjecs adjused raher for he losses expeced over he nex 4 weeks (i.e., duraion of he manufacuring delay) and he rule applied may be formulaed as follows: O MAX[, CO ( i ExpCO 1..4 i i PP )] where ExpCO indicaes he expeced level of cusomer orders and PP indicaes planned producion. Mos subjecs (9 ou of 1), who managed o sabilize he invenory over he hree rials, developed a similar decision rule.1 While he anchoring and adjusmen heurisic proposed by Serman [8] (see equaion (1)) is robus for any ype of cusomer order flucuaions, he decision rule followed by our subjecs (see equaion (2)) is robus only for he one-ime sep increase in he cusomer orders. As such, i could be deemed as subopimal. However, given ha he subjecs were asked o respond o a specific cusomer order change, i is plausible o accep he rule as appropriae. The rule developed by our subjecs is arguably easier o apply han Serman s anchoring and adjusmen heurisic. When he decision making inerface does no provide informaion on supply line explicily as i was in he original sudy by Serman [8] or oher similar experimens (see e.g., [9, 1, 15]) is esimaion is no sraighforward. To faciliae his exercise in our sudy we provided visual hins on supply line volume. 2 However, even he subjecs ha used hese exended inerfaces resored o he rule ha does no explicily incorporae he supply line (see equaion (2)). The experimen did no reveal any significan influence of he decision making inerfaces on he performance. Majoriy of he subjecs (14 ou of 15) in he firs rial were surprised and confused by he effecs he manufacuring delay had on heir invenories. The resuls of he pre-ask quesionnaire indicaed ha mos subjecs undersood he ask well and only 2 subjecs failed o provide a correc answer o he quesion abou he manufacuring delay. Sill, analysis of he hink-aloud proocols and he debriefing inerviews conduced afer he firs rial revealed ha a number of subjecs did no know how o ac upon his informaion (4 ou of 15) or have forgoen abou i alogeher (3 ou of 15). In he pos-ask inerviews roughly a half of he subjecs (6 ou of 15) indicaed hey would have wished o go hrough a raining session before he sar of he real game or o have a worked-ou example illusraing how he delay works. In case of all 9 subjecs who were evenually successful, i was clear ha heir performance improved as hey gained experience. These observaions sugges ha provision of all necessary daa alone is no likely o be sufficien for people o conrol effecively a producion-invenory sysem. A hands-on-experience has a vial role in building he rue undersanding of he sysem and in developing he abiliy o conrol i. (2) 1 The one subjec who conrolled INVENT successfully while no following he described decision rule misundersood he insrucions, and ried o achieve a zero invenory level only a he end of he rial raher han as soon as possible. 2 The mos explici presenaion of he supply line was he inerface presened in Fig. 2.

7 Experimenal exploraion of decision making in producion-invenory sysem Conclusion The Sysem Dynamics model used in he experimen focused mainly on he dynamics resuling from producion delay. I considered only one echelon of a supply chain and did no include such consrains as producion capaciy or raw maerials availabiliy. To faciliae developmen of decision rules, he applied model of coss assumed equal uni coss of invenory and change in producion. Despie such simplified environmen, we managed o observe problems common o more complex supply chain sysems. Since any simplificaion of he experimenal environmen faciliaes analysis of decision making processes, his finding is posiive [16, 17]. Raher han group design, we used a single subjecs approach collecing only a small number of observaions. Consequenly, we canno make any generalizaions based on our resuls. However, we were able o gain a unique insigh ino individual decision making, unaainable in he group design. The value of such deeper insigh is illusraed well by our observaion ha alhough he subjecs performance rails are similar o hose observed earlier, our daa sugges ha he subjecs relied on differen anchoring and adjusmen heurisic han his defined by Serman [8]. This suggess ha he single-subjec design may be more suiable for invesigaions aiming o uncover decision rules. In he curren sudy we have no managed o observe any clear effecs of differen decision making inerfaces on he subjecs performance. This may be due o he limied number of observaions we gahered per inerface each inerface ype was used by only 3 o 4 subjecs. Furher sudies are necessary o explore wheher here are cerain elemens of he decision making inerface ha may faciliae he producion-invenory ask. Sill, even wih he curren, imperfec decision-making inerfaces, we observed ha many of our subjecs developed successful decision rules in he course of he hree rials. These resuls sugges ha a hands-on experience is imporan for learning successful managemen of invenory-producion sysems. Indeed, many subjecs emphasized ha hey had fully undersood he ask and he sysem only afer a period of pracice. Hence, i seems advisable o advocae for INVENT-like games o become an inegral par of he manufacuring raining programmes boh a he universiy and professional levels. Acknowledgemens The sudy repored in his paper has been iniiaed by Dr. Agaa Sawicka as a par of a greaer research projec sponsored by he Research Council of Norway (gran no /V3). I has been carried ou a wo research insiuions Agder Universiy College, Norway, and Technical Universiy of Wroclaw, Poland; suppor of he research leaders a boh insiuions Professor Jose J. Gonzalez and Professor Edward Chlebus, respecively, is graefully acknowledged. We also hank Dr. Pior Magnuszewski and Pior Obr palski, MSc, for heir help in developmen of he INVENT simulaion environmen.

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9 Experimenal exploraion of decision making in producion-invenory sysem Wu, D.Y. and E. Kaok, Learning, communicaion, and he bullwhip effec. Journal of Operaions Managemen, in press. 16. Edwards, W., Conservaism in human informaion processing, in Judgmen under Uncerainy: Heurisics and Biases, D. Kahneman, P. Slovic, and A. Tversky, Ediors. 1982, Cambridge Universiy Press: Cambridge, UK. 17. Moxnes, E., Mispercepions of basic dynamics: he case of renewable resource managemen. Sysem Dynamics Review, 24. 2: p