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<article xmlns:xlink="http://www.w3.org/1999/xlink">
  <front>
    <journal-meta>
      <journal-title-group>
        <journal-title>Proceedings</journal-title>
      </journal-title-group>
    </journal-meta>
    <article-meta>
      <article-id pub-id-type="doi">10.18287/1613-0073-2015-1638-552</article-id>
      <title-group>
        <article-title>THE ALGORITHM FOR DYNAMIC OPTIMIZATION OF THE PRODUCTION CYCLE IN BEARING INDUSTRY</article-title>
      </title-group>
      <contrib-group>
        <contrib contrib-type="author">
          <string-name>M.I. Geraskin</string-name>
          <xref ref-type="aff" rid="aff0">0</xref>
        </contrib>
        <contrib contrib-type="author">
          <string-name>V.V. Egorova</string-name>
          <xref ref-type="aff" rid="aff0">0</xref>
        </contrib>
        <aff id="aff0">
          <label>0</label>
          <institution>Samara National Research University</institution>
          ,
          <addr-line>Samara</addr-line>
          ,
          <country country="RU">Russia</country>
        </aff>
      </contrib-group>
      <pub-date>
        <year>2016</year>
      </pub-date>
      <volume>1638</volume>
      <fpage>552</fpage>
      <lpage>568</lpage>
      <abstract>
        <p>The authors consider the problems in production resources optimization planning by production cycle criteria inside the business process of industrial companies working in the interim manufacturing sectors. The authors have worked-out the models of static and dynamic order optimization for the company production resources in view of pricing and process restrictions. We have also developed the production cycle mechanism optimization to be used in simulating the optimum programs for the companies that work in Russian bearing industry.</p>
      </abstract>
      <kwd-group>
        <kwd>optimization model</kwd>
        <kwd>optimum planning mechanism</kwd>
        <kwd>production cycle</kwd>
        <kwd>static model</kwd>
        <kwd>dynamic model</kwd>
        <kwd>net cost</kwd>
      </kwd-group>
    </article-meta>
  </front>
  <body>
    <sec id="sec-1">
      <title>Introduction</title>
      <p>Industrial production is the determinant for the Russian national economy growth,
specifying the industrial type of the national economy system, as within 2005-2014
the structural share of this parameter inside gross domestic product (GDP) was
coming to around 63 %, dropping only during the period of 2008 – 2009 crisis to 60 – 58
% [17]. Respectively, the dynamic of industrial production pre-determines the GDP
tendencies and as in shown in Fig. 1 is closely correlated with the rates of equipment
and machine-building industry changes: 2005 – 2008 growth declining phase was
followed by 2009 crisis, then the indices had restored their pre-crisis parameters and
the period of 2010 – 2014 has become once again the continuation of recession
tendency.</p>
      <p>The bearing production industry being the basic sector of GDP industrial components,
following the common trends during the considered period of time, demonstrates
lesser acute fluctuations: during the periods of economic growth declining (2005 –
2008) and recession (2010 – 2014) the industry growth indices were lower that the
indices for the other components, but in 2009 the declining in the industry has
compensated the more deep fall-down in equipment and machine- building. The important
role in Russian bearing production industry (around 13 -17 % in 2008 – 2014)
[15,16,17] was played by the companies located in Samara Region – Samara Bearing
Plant (SBP) and Instrument Bearing Plant (IBP) and Fig. 2 illustrates the dynamics of
production cycles ranging from 210 to 780 days. Respectively, for bearing production
companies with their products being the assembly parts for equipment and
machinebuilding, where the demand in these products is the derivative one, the most important
problem is correlate with resource demand planning as based upon the minimization
of production cycles.</p>
      <p>2010 2011
IBP production cycle, days
2012</p>
      <p>2013 2014</p>
      <p>
        SBP production cycle, days
(
        <xref ref-type="bibr" rid="ref1">1</xref>
        )
(
        <xref ref-type="bibr" rid="ref2">2</xref>
        )
(
        <xref ref-type="bibr" rid="ref3">3</xref>
        )
Within the frames of present-day studies the requirement on optimum planning as a
rule if formed for one of the sub-processes in production Company business-plan
(material provision, production or sales) with the restriction for the management
parameters related to other sub-processes. As an example of optimality criteria we have
considered the income in a form of resource linear function provided that temporary
indices of the business-process were ignored [Ошибка! Источник ссылки не
найден., 6, 8, 9, 10, 11, 14, 18, 19, 20, 23, 24]. Multi-process optimization models
were shaped in a form of requirements with several criterion: we have considered the
calendar planning with fuzzy restrictions [Ошибка! Источник ссылки не
найден.,Ошибка! Источник ссылки не найден.] by income and cost criteria; we
have optimized the nomenclature of produced products [Ошибка! Источник
ссылки не найден.] be criteria of sales, income, net-cost and labour consumption and
have optimized the projects from the view-points of timing and production cost
criteria [13]. So, the present-day mechanisms of optimum production planning do not
account for the availability of stable relations between the indices related various
subprocesses of Company business-process as well as for the effect of timing factor in a
form of production cycles in immobilization of the resources.
      </p>
    </sec>
    <sec id="sec-2">
      <title>Static Production Cycle Optimization Model</title>
      <p>Here we consider the task in optimum planning for the demand in Company
businessprocess industrial resources as based upon the criterion of production cycle:
min F(u) ,
where, F – duration of Company production cycle. The matrix of managing
parameters includes the scope of resource demand (listed requirements to the provision or
payment) at various stages of industrial process
u  uij , i  1,...,3, j  1,..., J i .</p>
      <p>As for the resources we have studied such positions (having the index “i”), as
materials, work-in-process (WIP), final products, nomenclature of which is marked by index
“j”.</p>
      <p>Criterion of efficiency is determined as per the formulae (for the conclusion see
Appendix):
F (u) </p>
      <p>T</p>
      <p> u0 
C(u) </p>
      <p>
        u1  P(u2)  C(u)  , u 0  i31 ui0
where, Т – duration of the period (in days); ui0 , i  1,...,3 – residual resources
(materials, WIP and final products, respectively) at the beginning of the period; С –
netcost of sales for the period; Р – non-material industrial costs for the period (labour
costs, social deductions, depreciation and other expenses).
As the presentation of cycle (
        <xref ref-type="bibr" rid="ref3">3</xref>
        ) includes the explicit argument in a form of demands
in material resources u1 let’s have a look at functions of non-productive c costs and
expenses also through the dependence on this argument, and this will allow us to
resolve the task in optimizing the functions using one variable value u1 . Foe this let’s
suppose the availability of stable interconnected trends in dynamics of demands for
the Company products and scope of orders for resources at various stages of
production as the function of material consumption during production P(u1 ), Pu/ (u1 )  0
1
and material consumption for the final product manufacturing C(u1 ), Cu/ (u1 )  0 .
1
Let’s consider the following models of these trends in a form of power functions
related to the interrelations between managerial parameters and status of the Company
P(u1 )  BPu1 P , BP  0,0   P  2 ,
C(u1 )  BCu1C , BC  0,0   C  2 ,
where m j1 j3 – mass consumption norm j1 - resource for the production of 1 product
item of j3 type; N jm3ax min  – demand fluctuation range for the product of j3 type;
where, BC , BP ,  C ,  P – factors of regressive models, restriction 0    2 is
put as related to real character of scale-expanding effect [Ошибка! Источник
ссылки не найден.]. Note, that functions (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ) - (
        <xref ref-type="bibr" rid="ref5">5</xref>
        ) may not reflect the direct
regressive relations with argument u1 and are formed by applying the most correlated
components of matrix (
        <xref ref-type="bibr" rid="ref2">2</xref>
        ), and then the consistent result of the regressions as will be
illustrated during the simulation stage.
      </p>
      <p>Now, let’s suppose the availability of prices declining trends for the resources,
acquired by the Company, z j  z </p>
      <p>1 j1 u1 j1 , j1  1,..., J1, z /j1u  0 , simulated in a form
of power functions
z j1 u1 j1   Azj1u1 zj1 , zj1  0, j1  1,..., J1 ,
where, Azj1 , zj1 – factors of price regressive models for resources.</p>
      <p>
        The following managerial restrictions are taken into consideration here. One is the
restriction for the resource consumption norms versus the scope of Customer’s
demands and this is determined basing upon the consumption norms and residual
resources:
u1max N   u1  u1min N ,
u1mj3ax min   J1 z j1 J3 m j1 j3 N jm3ax min   u30j3  k j3  u20 j3 ,
j11  j3 1 
(
        <xref ref-type="bibr" rid="ref4">4</xref>
        )
(
        <xref ref-type="bibr" rid="ref5">5</xref>
        )
(
        <xref ref-type="bibr" rid="ref6">6</xref>
        )
(
        <xref ref-type="bibr" rid="ref7">7</xref>
        )
k j3 - factor for the ready-made product of j3 type from WIP; z j1 - procurement price
for j1 resource (per unit of the mass).
      </p>
      <p>
        Restriction by the extreme level of procurement expenses
u1  u1min z  ,
is based upon price growth for the resources with the reduction of u1 by trend (
        <xref ref-type="bibr" rid="ref6">6</xref>
        ).
Let’s formulate the optimization demand for the resources using the criterion of
production cycle
u1*  arg min F (u1 ) ,
      </p>
      <p>
        u1U
with due consideration of restrictions:
U  u1  R u1max N   u1  u1min N , u1  u1min z,
where, U – is the area of permissible values for u1 .
(
        <xref ref-type="bibr" rid="ref8">8</xref>
        )
(
        <xref ref-type="bibr" rid="ref9">9</xref>
        )
(
        <xref ref-type="bibr" rid="ref10">10</xref>
        )
(
        <xref ref-type="bibr" rid="ref11">11</xref>
        )
(
        <xref ref-type="bibr" rid="ref12">12</xref>
        )
(
        <xref ref-type="bibr" rid="ref13">13</xref>
        )
      </p>
    </sec>
    <sec id="sec-3">
      <title>Mechanisms of Single-Period Cycle Optimization</title>
      <p>
        Let’s find the boundary condition for the restriction (
        <xref ref-type="bibr" rid="ref8">8</xref>
        ) basing upon the minimum
overall industrial expenses
j11
      </p>
      <p>J1
P (u)   z j1 u1 j1 u1 j1  Pu1 ,
in a form of the following assertion proved in the Appendix.</p>
      <p>
        Assertion 1: minimum of overall industrial expenses (
        <xref ref-type="bibr" rid="ref11">11</xref>
        ) at trends of types (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ) and
(
        <xref ref-type="bibr" rid="ref6">6</xref>
        ) is achieved for non-negative argument u1mji1n  0 in conditions
      </p>
      <p>
        1  P 1
u1mji1n z    BP P  zj1  J1 u1mji1n z   zj1
   z j1  1 Az j1   j11 
,
j1  1,..., J1 ,
 P  1 z j1  1 A
The effective minimum for the overall industrial expenses (
        <xref ref-type="bibr" rid="ref13">13</xref>
        ) corresponds to the
high-elastic pricing curves for the resources ( zj1  1). As a rule, in life they
implement the case with low-elasticity pricing curve (  zj1  1 ), and, respectively, the
restriction (
        <xref ref-type="bibr" rid="ref8">8</xref>
        ) is of no importance, as the minimum in production expenses if reached
at u1mji1n  0 . Note that provision (
        <xref ref-type="bibr" rid="ref13">13</xref>
        ) is valid only as typical for the production
companies at damped growth in non-material expenses together with the growth in
resources demand (  P  1).
      </p>
      <p>
        Supposing that a Company is using a single-type material production resources it’s
possible to some extent to replace the actual factor of pricing coefficient and scope of
resources demand by the average values (named as  z , Az , u1min ); thus, the
equation (
        <xref ref-type="bibr" rid="ref12">12</xref>
        ) will have the analytical solutions as
      </p>
      <p>
        Let’s formulate the mechanism of optimum planning for the criterion (
        <xref ref-type="bibr" rid="ref1">1</xref>
        ) of resource
demand without any account t for the restrictions (
        <xref ref-type="bibr" rid="ref10">10</xref>
        ), presenting the optimum
demand as u1*F . Let’s note preliminary that the joint analysis of trends (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ) and (
        <xref ref-type="bibr" rid="ref5">5</xref>
        )
shows that the rate of growth for the non-material expenses and cost should satisfy the
relation
 P   C  1 ,
(
        <xref ref-type="bibr" rid="ref14">14</xref>
        )
(
        <xref ref-type="bibr" rid="ref15">15</xref>
        )
as in other case (  P   C  1 ) the growth in non-materials resources should
significantly overtake the growth in self-cost and this is impossible for the industry with
high material consumption.
      </p>
      <p>
        Assertion 2: minimum duration of production cycle (
        <xref ref-type="bibr" rid="ref3">3</xref>
        ) at trends (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ) and (
        <xref ref-type="bibr" rid="ref5">5</xref>
        ) in view
*
of (
        <xref ref-type="bibr" rid="ref15">15</xref>
        ) is achieved for non-negative argument u1F  0 , that satisfies the conditions
as
 2u 0 с  (1   с )u1*F  Bp ( p   c )u1*Fp  0 ,
u1*F U1   C   P   C   P   C 1   P   C , P , u0 , u1   0
(
        <xref ref-type="bibr" rid="ref16">16</xref>
        )
, (
        <xref ref-type="bibr" rid="ref17">17</xref>
        )
where,
  C , P , u 0 , u1    C 2 C  1u 0   C 1 u1 
 BP  C   P ( C  1   P )u1p .
In several specific and representative cases the equation (
        <xref ref-type="bibr" rid="ref16">16</xref>
        ) may be resolved
analytically in a form of further mechanisms to optimize resource demand by criterion of
production cycle duration, area of applicability of which are determined in view of
*
u1F  0 :
u1*F   BP 2(uP0C C ) 
1/  p
 C  1 , at ,  P   C
(
        <xref ref-type="bibr" rid="ref18">18</xref>
        )
(
        <xref ref-type="bibr" rid="ref19">19</xref>
        )
(
        <xref ref-type="bibr" rid="ref20">20</xref>
        )
(
        <xref ref-type="bibr" rid="ref21">21</xref>
        )
u1*F 
      </p>
      <p>*
u1F 
u1*F 
2u0 C 
1   C</p>
      <p>C   P , at ,  C  1
2u 0 C
1   C  BP ( P   C )</p>
      <p> P  1
2u0 C  BP ( P   C )
1   C
 P  1 , at  C  1 .</p>
      <p>, at ,  C 
1  B </p>
      <p>
        P P
1  BP
Mechanism (
        <xref ref-type="bibr" rid="ref18">18</xref>
        ) that area of applicability for which correspond to the overtaking
growth in non-material resources being higher than overall expenses (  P   C ) is a
result of direct proportionality conditions for product self-cost and demand in
resources (  C  1 ), that presents the complete use of material resources during the
production phase. Having such a system of planning there is not accumulation in
resources and there is no shortage in them as well. Mechanism (
        <xref ref-type="bibr" rid="ref19">19</xref>
        ) used in case for the
damped growth in costs when compared to demand in resources (  C  1 ) presents
the match between the rate of growth in non-material production costs and rate of
growth in self-cost (  P   C ) and this is realized within the conditions of rigid
process regulations that ensure the constant co-relation of overall expenses and
nonmaterial expenses and is typical for the system of normative planning (standard
costing). Mechanism (
        <xref ref-type="bibr" rid="ref20">20</xref>
        ) is applied as a rule in case with  C  1 , as usually  P  1,
and this correspond to the concept of normative planning as in option (
        <xref ref-type="bibr" rid="ref19">19</xref>
        ), but in
condition of establishing a constant correlation between demands in material
resources and the level of non-material expenses (  P  1 ). Finally, option (
        <xref ref-type="bibr" rid="ref21">21</xref>
        ) is
typical for the Companies the production process of which has high material consumption
(metallurgy, machine-building, metal-working, construction material industry). As a
result of this the rate of growth in non-material expenses is significantly lower than
the rate of growth for material resources (  P  1 ). Area of applicability for
mechanism (
        <xref ref-type="bibr" rid="ref21">21</xref>
        ) also correspond to  C  1 . So, the analytical mechanisms (
        <xref ref-type="bibr" rid="ref18">18</xref>
        ) - (
        <xref ref-type="bibr" rid="ref21">21</xref>
        ) are
applicable to the most characteristic way in arranging the production process by
leading production companies when due to process effect the rate of expenses growth is
lower than the rate of material resources growth.
*
Analysis of mechanisms (
        <xref ref-type="bibr" rid="ref18">18</xref>
        ) - (
        <xref ref-type="bibr" rid="ref21">21</xref>
        ) shows that the value of u1F in it order of
magnitudes, is close to u 0 , and as u 0  u10 , then the cycle optimum is valid at the values
that significantly exceed the average balance in material resources.
      </p>
      <p>
        Note that in view of the correlation between order of magnitudes for the balance in
reserves u 0 , scope of demands u1*F1 and regression coefficients  C ,  P the
following correlation is valid
 C 2 C  1u 0   C 1 u1  BP  C   P ( C  1   P )u1p , so the
suf*
ficient criterion of condition (
        <xref ref-type="bibr" rid="ref17">17</xref>
        ) is valid practically for all u1F1  0 , therefore
 C , P ,u0,u1   0u1*F1  0 .
      </p>
      <p>
        Let’s form the mechanism of resource demand optimum planning by criterion being
the solution of provision (
        <xref ref-type="bibr" rid="ref9">9</xref>
        ) in a form of the following assertion.
      </p>
      <p>Assertion 3: mechanism
u1F  max min u1* , u1min ( N ), u1min ( z), u1max ( N )</p>
      <p>
        *
is the solution for the optimization task (
        <xref ref-type="bibr" rid="ref9">9</xref>
        ) with restriction (
        <xref ref-type="bibr" rid="ref10">10</xref>
        ).
      </p>
      <p>
        Mechanism (
        <xref ref-type="bibr" rid="ref23">23</xref>
        ) is economically interpreted the following way: optimum of
production cycle is achieved at such an index of demand in resources, that is the highest
taken from the optimum value of demand by mechanism (
        <xref ref-type="bibr" rid="ref16">16</xref>
        ), is this is not coming
outside the lower boundary of the demand (
        <xref ref-type="bibr" rid="ref10">10</xref>
        ) and maximum value of the demand
(
        <xref ref-type="bibr" rid="ref10">10</xref>
        ) following the production schedule.
      </p>
    </sec>
    <sec id="sec-4">
      <title>Dynamic Model and Cycle Optimization Mechanisms</title>
      <p>Dynamics of Company production process is determined by the monthly or quarterly
revisions of the plan due to the new demands from the Customers and this gives the
growth in scope of demands and provides for the accumulation of material balance.
So, the dynamic model of the production cycle is made in additive form by
subperiods (by months or quarters) of period “T”</p>
      <p>
         0  Tt u1t  Pt u  Ct u
F u   Tt ut  
t1 Ct u t1 2Ct u
with the following recurrent correlations that are analogous to formula (P3), and
determine the dependence of resource balance in subsequent sub-period on dynamics of
procurement and production for the previous sub-period of period “T”:
(
        <xref ref-type="bibr" rid="ref22">22</xref>
        )
(
        <xref ref-type="bibr" rid="ref23">23</xref>
        )
(
        <xref ref-type="bibr" rid="ref24">24</xref>
        )
u10(t1)  u10t  u1t  u2t ,u20(t1)  u20t  u2t  u3t  Pt ,u30(t1)  u30t  u3t  Ct
(25)
where uit – scope of demand in resources in “t” sub-period of period “T”; u0t – the
balance in resources at the beginning of pf “t” sub-period; τ – number of sub-periods
in period; Tτ – duration of sub-period.
      </p>
      <p>
        Let’s determine the dynamic correlations between the processes of production,
manufacturing and product sales with the scope of demands and level of initial balance in
resources in a form of power functions, analogous to (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ), (
        <xref ref-type="bibr" rid="ref5">5</xref>
        ):
Pt (u1t )  BPu10Pt0 u1tP , BP  0,0   P  2,0   P0  2 ,
Ct (u1t )  BCu10Ct0 u1tC , BC  0,0   C  2,0   C0  2 .
      </p>
      <p>
        Substituting (26), (27) in (
        <xref ref-type="bibr" rid="ref24">24</xref>
        ) we get the expression of a cycle in “t” sub-period:
Ft u 
      </p>
      <p>0</p>
      <p>Tt ut
BC u10Ct0 u C
1t
 Tt u1t  BPu10Pt0 u  P  BC u10Ct0 u C </p>
      <p>1t 1t
2BC u10Ct0 u C
1t
.</p>
      <p>The arrangement of a discrete temporary line of managing parameters uit , t=1,...,τ is
supposed in the dynamic model of production cycle optimization. It is based on the
minimization of criterion (28) in each sub-period of period “T” in compliance with
the following dynamic restrictions:
Ut  u1t  R u1mtax Nt   u1t  u1mtin Nt , u1t  u1mtin zt ,
where U t – the area of allowable values u1t in “t” sub-period.</p>
      <p>
        Let’s formulate the production cycle optimization mechanisms (28) without the
restrictions (29) and in view of these restrictions in a form of following assertions the
evidence of which is not presented as they are analogous to assertions 2 and 3.
Assertion 4: minimum duration of production cycle (28) in “t” sub-period at trends
(26) and (27) in view of (
        <xref ref-type="bibr" rid="ref15">15</xref>
        ) are achieved for the non-negative argument u1*t  0 ,
that satisfies the conditions
 2u 0t с  (1   с )u1*t  Bpu10Pt0 ( p   c )u1*tp  0
u1*t U1t   C   P   C   P   C 1   P   C , P ,u0t ,u1t   0,
(26)
(27)
(28)
(29)
(30)
(31)
where
  C ,  P , u 0 t , u1t    C 2 C 1u 0 t   C 1 u1t 
 BP u10Pt0  C   P ( C 1  P )u1tp
Assertion 5: mechanism u1*Ft  maxmin u1*t , u1mtin (Nt ), u1mtin (zt ), u1mtax (Nt )
(32)
is the solution of optimization task (28) with restriction (29).
      </p>
    </sec>
    <sec id="sec-5">
      <title>Production Cycle Dynamic Modeling</title>
      <p>
        Let’s formulate the models with non-material expenses and self-costs (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ), (
        <xref ref-type="bibr" rid="ref5">5</xref>
        ) and (27),
(27) at the basis of data on quarterly dynamics related to the respective parameters of
ОАО “Samara Bearing Plant” and ОАО “Instrument Bearing Plant“ for 2011 - 2014
period through the application of the least square method algorithms:
 ( 1) = 8585 10.3,  ( 1) = 45 10.76,  ( 1 ) = 92.6 100.08 10.56,
      </p>
      <p>( 1 ) = 0.6 10.27 10.76.</p>
      <p>
        The analysis of dynamic price statistical series and basic materials scope of supply
used by the Companies, have verified the validity of the hypothesis (
        <xref ref-type="bibr" rid="ref6">6</xref>
        ) on declining
price trends and have enabled us to formulate the single-phase regressions as follows:
z1 u11   205 u10,3 , z2 u12   105u10,2
(33)
(33)
The resulted regressions are adequate and verified in accordance with the
determination factor evaluation that exceeds 0.93 and Fisher’s ration test that is significantly
higher than the critical value at 5 % for the significance level.
      </p>
      <p>
        Figure 3 presents the curves for the production cycle F (u1 ) that is calculated as per
formulae (
        <xref ref-type="bibr" rid="ref3">3</xref>
        ) in view of regressions (33). We have also noted the restriction (
        <xref ref-type="bibr" rid="ref7">7</xref>
        ) in a
form of u1min ( N ) and restriction (
        <xref ref-type="bibr" rid="ref8">8</xref>
        ) is not shown as the low-elastic pricing
tendencies for the resources have been seen at the market (34) at which due to condition (
        <xref ref-type="bibr" rid="ref13">13</xref>
        )
the given restriction makes no difference. We show the actual values of the criterion
valid for 2015. As per the mechanism (
        <xref ref-type="bibr" rid="ref23">23</xref>
        ) the solution of tasks (
        <xref ref-type="bibr" rid="ref9">9</xref>
        ) and (
        <xref ref-type="bibr" rid="ref10">10</xref>
        ) is the
value of u1  u1min (N ) at which the duration of cycle is lower than the actual data
for 2015. The gross economic effect during profit immobilization in resources may
come to RUB 5.8 million.
      </p>
      <p>Dynamic optimization of production cycle is made as per the following sequence. At
the basis of data on residual reserves at the beginning of the period (equal to
respective dead-stock by the end of the previous period), as well as the predict for the scope
of demand during “t” sub-period (at t = 1,…,τ) they calculate the boundary values for
the restriction (29) and define the optimum value of the demand by mechanism (32).
Further they make the evaluation of resource balance by the end of “t” sub-period as
per formula (25), after that they make another calculation of scope for the demands in
(t+1) sub-period.</p>
      <p>F (u1 )
u1min (N )</p>
      <p>
        F(2013)
Optimization results (Table 1) illustrate the reduction in production cycle duration
resulted through the decrease in scope of demand and respective decrease in resource
balance by quarters of the year, as well as the total value for the years from 286 to 246
days. By comparing the results of 2015 plan static modeling the duration of the cycle
Ft u
days
at dynamic modeling is reduced by 34 days and this illustrates the importance
accounting to the dynamic factors while arranging the plans for the industrial demands.
190 000
140 000
90 000
40 000
-10 000 0
Optimization interval discretization analysis is given on the fig. 3 and 4, which shows
the dynamics of aggregated balances and orders by the types of resources (
        <xref ref-type="bibr" rid="ref2">2</xref>
        ) for three
variants optimal planning problem solving by the mechanism (
        <xref ref-type="bibr" rid="ref23">23</xref>
        ) for the planning
period of 2015-2016: 1) optimization interval corresponds to the calendar year,
designation “y”; 2) optimization interval corresponds to the calendar quarter, designation
“q”; 3) optimization interval corresponds to the calendar month, designation “m”. In
all three cases, there is a tendency of materials balances accumulation. This
accumulation results from the planned production volume reduction. Work in progress balances
go down in case of annual and quarterly planning due to the higher-than-anticipated
planned production output growth. However, such balances go up in case of monthly
planning that allows to take account of intraquarter distribution of output. Unsold
output balances go up in case of annual and quarterly optimization. However, they go
down in case of monthly planning, because it takes account of the sales intraquarter
distribution; the latter aspect is the major contributor to the cycle time reduction in
case of monthly planning in comparison with the first two variants. Comparison of
cycle time values obtained as the result of optimization by three variants of
discretization, with actual cycle values for 2015-2016, confirms that the planning interval
reduction leads to the efficiency criterion increase.
      </p>
    </sec>
    <sec id="sec-6">
      <title>Conclusion</title>
      <p>We have designed the models of static and dynamic modeling for the industrial
Company production cycles in view of the restrictions related to the Customer scope of
demand and pricing police of material providers.</p>
      <p>Static single-period model enables us to evaluate the scope of reserve acquisition that
optimize the production cycle but is not taking into account the fluctuations in the
production schedule being the result of irregularity in Customer scope of demand
during a specific period of time (one year), thus reflecting the fluctuations in residual
resources and substantiating the necessity in designing the dynamic model. The static
model based upon the supposition expressing the dependency of production costs on
dynamics of residual resources, is grounded on the predictions for the Company
production costs versus the scope of demand in resources as per the historical information
and is adequate with the stable level of resources balance in dynamics.
Dynamic model of the production cycle is based upon the prediction for the industrial
costs and their dependence versus fluctuations in demand and balance in reserves.
With this in mind the decrease in consistency of simulation due to growth in number
of predicted variable values is compensated by the adequate accounting of features
related to the dynamics of production cycle. The model is using the method of
consecutive optimization by the sub-periods in planning schedule to shape the program of
material provision that is co-related with the dynamics of final product production.</p>
    </sec>
    <sec id="sec-7">
      <title>Appendix</title>
      <p>
        Formula Substantiation (
        <xref ref-type="bibr" rid="ref3">3</xref>
        ): This formula comes out of the following correlations
and transformations: basic formula to calculate production cycle [22]:
      </p>
      <p>T 3
F (u)  Cu  i1 ui
where ui – average surplus in resources for the period as calculated using formula.
ui 
ui0  uT</p>
      <p>i , i  1,...,3 .</p>
      <p>2
In view of correlations in material, industrial and stock balance reserves [22]
u1  u1T  u10  u2 , u2  u2T  u20  u3  P , u3  u3T  u30  C ,
the average surplus in resources are determined as follows
u1  u</p>
      <p>2
u1  u10 
2 , u2  u20 
u2  P  u
2
3 , u3  u30 
u3  C
2
,
where uiT – surplus in resources by the end of the period Т.</p>
      <p>
        Substituting (36), (37) and (38) in (35), we get (
        <xref ref-type="bibr" rid="ref3">3</xref>
        ).
      </p>
      <p>
        Argument for Assertion 1: substitute (
        <xref ref-type="bibr" rid="ref4">4</xref>
        ) and (
        <xref ref-type="bibr" rid="ref6">6</xref>
        ) into (
        <xref ref-type="bibr" rid="ref11">11</xref>
        )
      </p>
      <p>J1  J1  P
P   Azj1 u1 zj1 1  BP   u1 j1 
j11  j11 </p>
      <p>
        ,
differentiating (39), we’ll write down the required condition for the minimum (
        <xref ref-type="bibr" rid="ref11">11</xref>
        )
P/
u1 j1
      </p>
      <p>
         J1 P 1
 Azj1  zj1  1u1 zj1  BP P   u1 j1 
 j11 
 0, j1  1,..., J1
from where we get the correlation (
        <xref ref-type="bibr" rid="ref12">12</xref>
        ). Note that the non-negative solution of the
equation (
        <xref ref-type="bibr" rid="ref12">12</xref>
        ) corresponds to the limit as
 zj1  1,
      </p>
      <sec id="sec-7-1">
        <title>The sufficient criterion for the minimum</title>
        <p>
          (34)
(35)
(36)
(37)
(38)
(39)
P //
u1 j1  Azj1 zj1  zj1  1u1 zj1 1  BP P  P  1 J1 u1 j1  P 2
 j11 
 0,
  J1  P 2
 P  1  BP P  P  1 j11u1 j1   Az j1  z j1  1 z j1 u1jz1j1 1 ,  z j1  0,

 P  1  z j1  1  Az j1  z j1  1 z j1 u1jz1j1 1  BP P  P  1 j1J11u1 j1  P 2 ,
however, considering (40), condition (41) is observed only with correlation (
          <xref ref-type="bibr" rid="ref13">13</xref>
          ).
Argument for Assertion 2: Basing upon the optimality required condition (
          <xref ref-type="bibr" rid="ref3">3</xref>
          ):
        </p>
        <p>
          Tu0 uc1  T
Fu/1 (u1)   c B 1
c
2Bc
(1   c )u1c  TBp ( p   c )u1pc1  0
2Bc
we get equation (
          <xref ref-type="bibr" rid="ref16">16</xref>
          ) to find parameter u1*F . Sufficient condition for the minimum:
(40)
(41)
(43)
we get the following
(1   c ) cu1c1 
        </p>
        <p>TB
2Bcp ( p   c )
 C 2 C  1u 0   C 1 u1  BP  C   P ( C  1   P )u1p  0.
(42)</p>
      </sec>
      <sec id="sec-7-2">
        <title>As for the actual</title>
        <p>
          Companies the
order of values
2 C  1u 0   C  1; that’s why sign (43) is under the influence of correlation
 C ,  P only. In view of range changes for  C ,  P , determined in (
          <xref ref-type="bibr" rid="ref4">4</xref>
          ) and (
          <xref ref-type="bibr" rid="ref5">5</xref>
          ), the
condition (43) in true at
u 0   C , then
 C   P   C   P   C  1   P  u1*F1  0,
 C   P   C  1   P   C ,  P , u 0 , u1   0,
where
  C ,  P , u0 , u1    C 2 C  1u0   C  1 u1 
 BP  C   P ( C  1   P )u1p
.
        </p>
        <p>
          In view of (
          <xref ref-type="bibr" rid="ref15">15</xref>
          ) the condition (440) is as follows (
          <xref ref-type="bibr" rid="ref17">17</xref>
          ).
        </p>
        <p>
          Argument for Assertion 3: let’s have the formula of Lagrange for the (
          <xref ref-type="bibr" rid="ref9">9</xref>
          ) with
restriction (
          <xref ref-type="bibr" rid="ref10">10</xref>
          )
and with differentiation we’ll get the system of optimality required conditions
While computing (47) as rigid imparity for the solution of the system (46), (47) will
be the vector of Lagrange multipliers 1  2  3  0 , respectively, from (46)
the optimality required conditions are coming out as
F u1 
u1
L
L
F u 
1  1   2  3  0 ,
L
2
L
3
form (
          <xref ref-type="bibr" rid="ref16">16</xref>
          ) to define the optimum criteria without any restrictions in u1*F , and at this
u1*  u1*F . In case we complete any of the conditions (47) as rigid congruence by
system solutions (46), (47) will be presenting the parameter of management,
satisfying the conditions
That will be formally presented as (
          <xref ref-type="bibr" rid="ref23">23</xref>
          ). The sufficient condition of extremum in task
(
          <xref ref-type="bibr" rid="ref9">9</xref>
          ) with restriction (
          <xref ref-type="bibr" rid="ref10">10</xref>
          ) is completed, if the sufficient condition (
          <xref ref-type="bibr" rid="ref17">17</xref>
          ) defines the range
*
of u1F U .
(44)
(45)
(46)
(47)
        </p>
      </sec>
    </sec>
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