AN ANALYTICS APPROACH FOR INCORPORATING MARKET DEMAND INTO PRODUCTION DESIGN AND OPERATIONS OPTIMIZATION

This chapter focuses on the cost of manufacturing a product with a supporting discussion of the methods of management science analytics, which may be deployed for production design and operations optimization. It discusses the notion of optionality for several different purposes, namely, to identify equipment portfolio, design line throughput, purposefully select bottleneck(s), engineer product flexibility, and manage the inventory of work in process (WIP) and finished goods (FG) inventory under the uncertainty of commercial demand modeled endogenously with the plant operations. The chapter reviews discrete‐event simulation and probabilistic financial methodology, which we have deployed to characterize an energy storage manufacturing process at General Electric. The goal is to manage throughput, inventory, expense, and fulfillment with an emphasis on the financial ramifications of production engineering and plant operational decision support. The chapter discusses the market and production coupling and treat product design as one of the distinguishing features of an alternative configuration.