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Application of the Net Present Value Criterion in Random and Flow Shop Scheduling *
Author(s) -
Scudder Gary D.,
SmithDaniels Dwight E.
Publication year - 1989
Publication title -
decision sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.238
H-Index - 108
eISSN - 1540-5915
pISSN - 0011-7315
DOI - 10.1111/j.1540-5915.1989.tb01570.x
Subject(s) - tardiness , profitability index , flow shop scheduling , job shop , computer science , net present value , operations research , maximization , measure (data warehouse) , scheduling (production processes) , due date , mathematical optimization , job shop scheduling , econometrics , mathematics , production (economics) , economics , microeconomics , schedule , data mining , finance , operating system
While the majority of the literature on shop scheduling has emphasized time‐based performance criteria such as mean flow time, lateness, and tardiness, the primary goal of management should be the maximization of shop profitability. In this research the net present value (NPV) criterion is introduced to measure shop profitability. This measure combines aspects of job flow time and inventory holding costs into a single measure. A simulation model of a job shop is used to examine the performance of a variety of time‐ and value‐based scheduling rules. These rules are evaluated with respect to the NPV criterion in both random and flow shop environments. The results suggest that priority rules that utilize monetary information about jobs yield a higher NPV than many time‐based rules in most situations, with little sacrifice in job tardiness. A well‐researched time‐based rule, critical ratio, also provides excellent performance when the shop is heavily loaded.