An adaptive product changeover policy for a capacitated two-product supply chain in a non-stationary demand environment

Abstract

ABSTRACT The present paper investigates the effectiveness, in terms of fill rate, of a new adaptive production control policy for a two-product, two-echelon (i.e. factory and retailer) supply chain subject to a non-stationary customer demand. To model the capacity constraints more realistically, the factory node consists of an unbuffered production line subject to failures, and non-negligible changeover times. To cope with the disruptive events, we propose a new production control strategy named Adaptive Hedging Corridor Policy. A simulation model based on discrete-time difference equations is developed, and a two-step experimental campaign is conducted to compare the proposed control policy with two well-known alternatives proposed in the literature. The analysis of the results demonstrates the effectiveness of the new adaptive strategy in maximising the fill rate of supply chains subject to a non-stationary demand.