A Production Planning Based on the Minimum Kullback-Leibler Information

Abstract

Most production cannot exactly trace the variations in demand because of the production capacity or requirement of production smoothing. In this paper a new procedure for deciding the production planning is suggested based on an information theory approach. The procedure involves two steps: (1) The determination of the frequency of each production level on the planning horizon minimizing the influence of the variation in demand levels and maximizing the expective profit, (2) The determination of production level at each period in accordance with the decided frequency. In the first step an information theory approach shall be attempted using the Kullback-Leibler information as a measure of distance between the demand and the production frequency distributions.