Performance Evaluation And Management Policies For Production And Service Systems

With the changes in global economical and social environment, some newfeatures have emerged in enterprise operations management. Firstly, manufacturingand services industries begin to show the trend of integration. Many traditionalmanufacturing firms come to realize the importance of product based services sincethey (e.g. logistics service) may maintain and even enhance customer loyalty and thusincrease benefit margins. Therefore, firms not only provide physical products tocustomers, but also delivery intangible product-based services. In this way firms needto manage both tangible products production and intangible services deliverysimultaneously. Systems operated by these firms to manage both two systems arecalled production and service systems. The dynamics of production and servicesystems differ from those of either classical production inventory system or servicesystem. Meanwhile, traditional operation management studies are all made on eitherthe production or service systems only, so there is no existing management theory andframework for the production and service system can be referred. Secondly, in thefierce market competition environment, enterprises need to consider the customer’sstrategic behaviors. With the improvement of technology and quality, the competitionamong manufacturing firms is no longer only on the physical properties of productssuch as qualities and functions, but also on the service levels. If the response timeexceeds the expected waiting time, customers may balk or renege. The impatientbehaviors not only result in benefit lossing, but also have a significant impact on theoperations management. Therefore, it is of important significance to academicresearchers and enterprise managers to study how to manage both production andservice capacity by taking into account customer behaviors and the characteristics ofthe production service system.This dissertation studies the following production and service capacitymanagement problems impatient behaviors and the integration of production andservice considered.(1) The optimal production policy and performance evaluation of a productionand service system. To deliver physical product and intangible product based servicesto customers, a firm needs to manage both tangible products and intangible servicessimultaneously. However, the dynamics of production and service system differ fromthose of either classical production inventory system or service system. As a result, the author studies the optimal production policy of a production service system andthe impact of customers impatience on the system performance.The results show that the optimal production policy is a threshold-type policy.Moreover, the threshold increases with the number of waiting orders. Themonotonicity of the optimal control curve verifies that, to effectively manage aproduction and service system, the state of service subsystem must be considered. Theauthor also analyzes the impact of revenue on the optimal policy numerically. It isinteresting that the optimal control policy is independent of revenue. Balking andreneging have significant impacts on the system performance. Higher impatiencewould increase the inventory level, decrease the number of waiting customers, anddecrease the systems throughput. In addition, service capacity also influences theabove results.(2) The capacity allocation policies of a production and service system withtwo-class items. The firm needs to allocate production and service capacity betweentwo-class items and customers when the system produces two-class items and servestwo-class customers. In addition, the interaction between production and servicecapacity allocation policies results in an integrated capacity allocation problem whichis more complex than those of either traditional production system or service system.Coordinated capacity allocation policies of a production and service system withtwo-class items and customers are analyzed. Moreover, since the optimal capacityallocation policy is a priority policy, the waiting time of low priority customers islonger than that of high priority customers. Therefore the impact of low prioritycustomer s impatience is considered as well.The results show that the optimal service capacity allocation policy is a staticpriority policy, which reflects the combination of parameters of both production andservice system and consists of three types of indexes: holding cost, service rate andwaiting cost. The optimal production capacity allocation policy is studied by anextensive computational experiment since it is unavailable analytically. The resultshows that the optimal production policy is a state-dependent plausible policy.Differing from the optimal production capacity allocation policies of productioninventory system, the optimal production policy of production service system iseffected by the parameters of the service subsystem, service rate and waiting cost.Then two heuristic production capacity allocation policies with simple forms areproposed based on the optimal policy s characteristics. Numerical examples verifythat the heuristics perform well. The impact of low priority customers impatience onthe optimal inventory level is negligible, but it significantly impacts the expectedinventory of low priority item and the expected queue length of low priority customer.In addition, we find that the expected balking rate is decreasing in the expectedreneging rate. (3) Modelling and performance evaluation of a production and service systemwith batch demands. The impacts of batch demand and customers impatience on thesystem performance and stability are studied when inventory is regulated by (,)policy.The results show that the greater the batch size, the smaller the inventory leveland the more customers would wait for services. The throughput rate is relativelystable when the batch size is small. However, if the batch size increases to a certaindegree, the stability decreases significantly. The batch size has a significant impact onthe stability of the system. The volatility of the inventory and waiting queue lengthincreases with the batch size, while the throughput rate decreases with the batch size.A coordinated production and service capacity allocation policy would reduce totalcost, inventory level and queue length. Referring to the impact of impatient behaviorswith batch demands, the results show that the impatience and batch size have a dualamplification effect on the inventory level and queue length. More specifically,greater batch size would results in higher expected balking rate and reneging rate,greater customer impatience slightly impacts the volatility of inventory level butsignificantly impact the and queue length.In order to maximize the profit (or minimize the cost) of production and servicesystems, this dissertation studies the optimal production policy of a single-itemproduction and service system, the optimal production and service capacity allocationpolicy of a two-item production and service system, the performance evaluation of aproduction and service system with batch demands, and the impacts of impatience onthe three systems with inventory levels and waiting order lengths as the state variablesand production and service capacity management as the measures. The optimalpolices are obtained, the impacts of impatience on system performances are presented.The results not only enrich the studies on the production and service systems, but alsoprovide the managerial insights to the systems management.