Department of Management Sciences, University of Manchester Institute of Science and Technology

^*Now with the Department of Education and Science

^†Now with M. J. Bevan Ltd., Computer Consultants.

Abstract

The paper describes initial simulation work on various factors associated with production and inventory decisions. The machine shop model which was used comprised one machine only on which a small product range is manufactured. The effects of variations in output mix and demand levels on the rate of return on investment is examined. The necessary adjustments in stocking policy for an economic level of capacity utilization are indicated, and a "capacity profile" is produced which reveals the efficient operating frontier for the different cases. The direction of further experiments is indicated.