A System Dynamics Approach Towards Analysis of Hybrid Make-to-Stock/Make-to-Order Production Systems

Abstract

Hybrid Make-To-Stock (MTS)/Make-To-Order (MTO) production system benefits from both pure MTS and MTO systems and thus, is regarded as a valuable production system in order to respond today’s market conditions such as demand uncertainty, shortage of raw materials, and high inventory holding costs. Our purpose is to explore such systems over covering most of the influential factors that have not been taken into account so far. Hence, a system dynamics (SD) model is proposed in this study considering three different series of workstations (MTS, MTO, and MTS/MTO) in a manufacturing firm with a continuous production line. The performance of the developed model is assessed in terms of holding costs as well as product’s delivery lead-time. Moreover, this study considers the impacts of some significant, exogenous variables such as different outlays including operating expenses, holding costs, and the company’s net profit. The results show the superiority of our proposed model in contrast with previous studies in a cost-oriented point of view.