A two-level replenishment frequency model for TOC supply chain replenishment systems under capacity constraint

Abstract

Good production planning and replenishment management are important for a firm to keep competitive in the market. The theory of constraints-supply chain replenishment system (TOC-SCRS) is a replenishment method under the TOC philosophy. In the application of the TOC-SCRS in a node of a supply chain, the replenishment frequency (RF) and the reliable replenishment time (RRT) are required parameters. Generally, the RF of a node depends on the public transportation schedule such as ship schedules or its private conveyor schedule. If this node is a plant, however, the RF depends on the setup frequency in this plant, and a higher RF (i.e., once a day) is preferred by the TOC because of lower inventory and quick response to different market requirement. Basically, the RF in a plant is determined by its sales or production quantity. When sales increase significantly, the RF in a plant requires to be elongated from higher frequency (i.e., once a day) to lower frequency (i.e., once every two or more days) due to the limited capacity. Therefore, a two-level replenishment frequency model for the TOC-SCRS under capacity constraint is proposed. This model is especially suitable to a plant in which different products have a large sales volume variation. Numerical examples are utilized to evaluate the application of the proposed method. Employing this proposed methodology will facilitate a plant or a central warehouse to implement an effective TOC-SCRS successfully.