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An Optimal Strategy for Maintaining Excess Capacity

By Daya Gaur


Boeing is a manufacturing industry with very low production volumes of very large units. As such, they experience huge fluctuations in demand. A standard inventory model dictates massive changes in production capacity as demand varies. However all such models assume a continuous production stream. In this report we investigate the following question whether such a model is sensible in a problem of such large scale granularity. We describe a combination of stochastic, financial and simulation models to model the production of airplanes. A preliminary simulation of the model is also presented

Topics: Transport and Automotive, Aerospace and defence, Finance
Year: 1998
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