Abstract
A dynamic constraint elasticity of substitution (CES) framework is presented for modeling cost in made-to-order production. The criterion is cost minimization subject to production function constraints. The time paths of the state variables are consistent with those that are generated by actual production programs. In addition to providing an alternative explanation of the learning curve, this model also demonstrates that knowledge brought into the production process affects the rate of learning. This explains why learning is a more important cost determinant for made-to-order as opposed to assembly-line programs.
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Literature
Gulledge, T.R.; Womer, N. K.; Dorroh, J.R. “Learning and cost in airframe production: a multiple-output production function approach.” Naval Research Logistics Quarterly 31, 67–85 (1964).
Mangasarian, O. L. “Sufficient Conditions for the Optimal Control of Nonlinear Systems.” SIAM Journal on Control 4, 139–152 (1966).
Womer, N. K. “Learning Curves, Production Rate, and Program Costs.” Management Sciences 25, 312–319 (1979).
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© 1992 Springer-Verlag Berlin · Heidelberg
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Dorroh, J.R., Gulledge, T.R., Womer, N.K. (1992). Dynamic Learning Augmented Production Planning Models. In: Bühler, W., Feichtinger, G., Hartl, R.F., Radermacher, F.J., Stähly, P. (eds) Papers of the 19th Annual Meeting / Vorträge der 19. Jahrestagung. Operations Research Proceedings, vol 1990. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-77254-2_44
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DOI: https://doi.org/10.1007/978-3-642-77254-2_44
Publisher Name: Springer, Berlin, Heidelberg
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