The I.P.S.O. control system

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Abstract
This paper presents the results of a study conducted by a team of the research group of the Information Systems and Automation department of Philips Industries. The object of the study was the design, analysis and evaluation of a Management Information System. The purpose of this MIS is the integral control of the flow of goods associated with the production and distribution of a group of products. The name of the system is I.P.S.O., which stands for Initiating Production by Sales Orders. The system consists of (a) a forecasting procedure for market demand (b) a medium term control system for workforce planning (c) a. net requirements calculation procedure (d) a short-term control system for raw materials purchasing and production and distribution scheduling. These various sub-systems are combined into an integral system. In order to optimize and to evaluate the systems’ behaviour, an analysis was carried out and characteristic variables were described as functions of the control parameters. A procedure has been developed for the periodical, integral optimization of the control parameters to take into account changes in operating conditions. For a specific group of about 4000 products an economic evaluation has been carried out. The main improvements turned out to be; (a) an appreciable reduction of stocks at constant or even higher service level (b} a better control of the internal business cycle. Over the range of activities covered, one might expect a 20-25% increase in profit.

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