Production Planning and Engineering Process Improvement

Abstract

The authors present an optimal control model to allocated equipment capacity between production that generates immediate revenue and engineering process improvement activity that results in increased future output. The benefit of engineering activity is modeled as a concave function of the total number of engineering lots processed to date, while the production facility is represented by a nonlinear clearing function capturing the nonlinear relationship between resource utilization and cycle time. We analyze the model to develop structural results and illustrates its behavior with numerical experiments.