A scenario-based decision framework for the order promising process in hybrid MTS/MTO production systems considering product substitution

Abstract

ABSTRACT Considering the increasing competition among manufacturers and the diversification of customer orders, it is important to use the optimal production system. Hybrid manufacturing systems have proven to be a viable solution to achieve a satisfactory level of customization while maintaining adequate production volumes. This article determines the optimal strategy for decision makers in order to choose the appropriate method of supplying customers’ orders. In this article, a hybrid MTS-MTO production system has been studied in two different scenarios. For this purpose, a mixed-integer linear bi-objective model with product substitution and replaceable materials has been developed and solved by a Lagrangian Relaxation algorithm. The findings of this study reveal that enabling product substitution by manufacturers leads to an increase in the number of accepted orders, along with resulting in a higher average level of customer dissatisfaction. The system prioritizes the fulfillment of orders from permissive customers. Also, with the increase of uncertainty in each of the supplying methods, manufacturers are using other sources to supply raw materials to satisfy the accepted orders.