Markku Kuula

Selecting a flexible manufacturing system using multiple criteria analysis

A visual interactive decision support framework designed to aid the decision-maker, typically top management, in selecting the most appropriate technology and design when planning a flexible manufacturing system (FMS) is described. The framework can be used in the preinvestment stage of the planning process, after the decision in principle has been made to build an FMS. First, both qualitative and quantitative criteria are used to narrow the set of alternative system configurations under consideration down to a small number of most attractive candidates. After this prescreening phase, a multiobjective programming model is formulated for each remaining configuration, allowing the manager to explore and evaluate the costs and benefits of various different scenarios for each configuration separately by experimenting with different levels of batch sizes and production volumes. The system uses visual interaction with the decision-maker, graphically displaying the relevant trade-offs between such relevant perfo...

Transboundary air pollution in Europe: An interactive multicriteria tradeoff analysis

Abstract In this paper, the acid rain problem in Europe is discussed, stressing the transboundary tradeoffs between abatement costs of sulphur emission reduction and corresponding deposition levels in the different countries. An interactive decision support methodology is proposed which utilizes a powerful nonlinear multicriteria software package to evaluate various scenarios and tradeoffs. This methodology provides a more appropriate tool for policy making than single-objective minimization of costs with given target deposition levels, because in the latter the tradeoffs cannot be analyzed directly. The results from a tradeoff analysis using previously published data suggest that reasonable deposition levels can be reached with limited transfers of funds between countries. The extent of these transfers can be controlled by selecting appropriate target levels for the criteria across countries.

Coping with the change: a longitudinal study into the changing manufacturing practices

Purpose – The purpose of this paper is to study how, in recent decades, manufacturing sites have reacted to changes in their business environment by developing their management practices. This also makes it possible to predict the behavior and lifecycles of the new practices adopted by companies.Design/methodology/approach – The study is longitudinal, conducted in 1993, 2004 and 2010. It used a standard questionnaire, based on the “Made in Europe” benchmarking study. The results were analysed by Friedmans rank order method. The use of a three (or more) data‐point longitudinal study is the clearest way to reveal changes in, and the behaviour of, the practices.Findings – The data suggest that there is a lifecycle for the practices used in companies and that many of the practices adopted in the late 1990s are already out of date. However, personnel‐related practices seem to last longer than process‐related practices. Furthermore, these practices seem to follow the curve of the Bass diffusion model.Research ...

Operations research and its practice in Finland — An update

Abstract This paper provides an update on the state-of-the-art of Operations Research and its practice in Finland. We cover academic Operations Research and applications. Furthermore, we discuss, as an example, the careers of Helsinki School of Economics OR/MS-graduates and their views on the usefulness of OR-education in Finland.

Real options valuation of forest plantation investments in Brazil

In this paper, we consider investments in eucalyptus plantations in Brazil. For such projects, we discuss real options valuation in the place conventional methods such as IRR or NPV, possibly with CAPM. Traditionally, real options valuation assumes complete markets and neglects market imperfections. Yet, market frictions, such as transaction costs, interest rate spreads, and restricted short positions, can play an important role. We extend real options valuation to allow incomplete and imperfect markets. The value is obtained as a competitive price, given markets of competing investment opportunities, such as real and financial assets. Under perfect and complete markets, such valuation method is consistent with conventional real options theory. Stochastic programming and standard software is used for valuation of eucalyptus plantations. We estimate the underlying interdependent diffusion processes of stock market, interest rates, exchange rates and pulpwood price, and derive novel expressions of stochastic integrals to be employed in scenario generation for discrete time stochastic programming.

Longitudinal benchmarking studies in operations management: lessons learned

Purpose – The purpose of this paper is to explore the possibilities and pitfalls of longitudinal studies in the field of operations management (OM).Design/methodology/approach – A longitudinal study conducted in Finland was analyzed from the methodological point of view. In the theoretical part, a framework for analyses was created by studying the literature of longitudinal studies within and without the OM field.Findings – Longitudinal studies are important in revealing root‐cause effects. They are particularly important in generating new ideas and theories and in questioning old ones. However, longitudinal studies are somewhat difficult to conduct and some unexpected challenges may arise, such as the effect of technology development on data retrieval.Research limitations/implications – The analyses in this study are based on the data obtained in a longitudinal study conducted in the years 1993, 2004 and 2010. The sample in the longitudinal study is quite small for real quantitative statistical analysis,...

Solving Intra-Company Conflicts Using the RAMONA-Interactive Negotiation Support System

A key issue within manufacturing organizations is how to induce the different departments and/or interest groups to work most effectively for the common good of the company. In almost every company daily conflicts exist between different interests and/or interest groups. For example in a typical manufacturing company, production management and marketing management perspectives can contain different goals with respect to the terms of sales with resultant inefficiencies. This paper describes 1) in detail the RAMONA-program a user-friendly interactive Negotiation Support System, and 2) how RAMONA can support the different interest groups involved in intra-company negotiations for the overall benefit of the firm.

Workload balancing in the manufacturing environment: A multicriteria trade-off analysis

We describe an application of a custom-designed model-based decision tool system to analyse the workload balancing problem at an assembly plant of Nokia Telecommunications, a Finnish manufacturer of highly customized electronic products. Our system was designed to control effectively and manage the production process of electronic devices for telecommunications link systems and satellite communications systems, among others. It assisted management in determining accurate workload forecasts, in anticipating bottlenecks in the production process, and in providing recommendations regarding how to distribute the production load optimally over the planning horizon. In particular, the system facilitated a trade-off analysis between important competitive factors, such as system throughput time and labour costs. Interesting side benefits emerged from the study.

A win–win method for multi‐party negotiation support

In this paper, we introduce an interactive multi-party negotiation support method for decision problems that involve multiple, conflicting linear criteria and linear constraints. Most previous methods for this type of problem have relied on decision alternatives located on the Pareto frontier; in other words, during the negotiation process the parties are presented with new Pareto optimal solutions, requiring the parties to sacrifice the achievement of some criteria in order to secure improvements with respect to other criteria. Such a process may be vulnerable to stalemate situations where none of the parties is willing to move to a potentially better solution, e.g., because they perceive – rightly or wrongly − that they have to give up more than their fair share. Our method relies on “win–win” scenarios in which each party will be presented with “better” solutions at each stage of the negotiations. Each party starts the negotiation process at some inferior initial solution, for instance the best starting point that can be achieved without negotiation with the other parties, such as BATNA (best alternative to a negotiated agreement). In subsequent iterations, the process gravitates closer to the Pareto frontier by suggesting an improved solution to each party, based on the preference information (e.g., aspiration levels) provided by all parties at the previous iteration. The preference information that each party needs to provide is limited to aspiration levels for the objectives, and a partys revealed preference information is not shared with the opposing parties. Therefore, our method may represent a more natural negotiation environment than previous methods that rely on tradeoffs and sacrifice, and provides a positive decision support framework in which each party may be more comfortable with, and more readily accept, the proposed compromise solution. The current paper focuses on the concept, the algorithmic development, and uses an example to illustrate the nature and capabilities of our method. In a subsequent paper, we will use experiments with real users to explore issues such as whether our proposed “win–win” method tends to result in better decisions or just better negotiations, or both; and how users will react in practice to using an inferior starting point in the negotiations.

Strategic roles of service sites: application of Ferdows’s model

Purpose – The purpose of this paper is to examine the applicability to the service business of general models used in the manufacturing environment. This is done by applying Ferdows’s model, “the strategic role of the plant”, in two cases. Design/methodology/approach – This study uses the case approach. One case (IBM Nordic) is based on an interview, while the other case (Google) relies on secondary data. In each case the operations are mapped on Ferdows’s model. Findings – The cases indicate that the same kind of roles can be found in the service business as in traditional manufacturing environments, and that these roles are widely used. However, for communicative purposes, the model was terminologically slightly modified. Research limitations/implications – Although this study presents the findings of only two cases, the knowledge of material available from public sources leads us to believe that these findings are universal. The model is easy to communicate in the service sector and is thus a very valu...