An exploratory study of protective inventory in a re-entrant line with protective capacity

Abstract

While the effect of protective inventory on the performance of simple lines has received considerable attention, the same cannot be said for re-entrant lines. This paper attempts to meet that deficiency. This paper examines two different but related issues. First, the theory of constraints (TOC) evaporating cloud method is employed to show the traditional dilemma of increasing work-in-process (WIP) to fully utilise resources versus decreasing WIP inventory to reduce cycle time. The assumptions and implications of three different management philosophies (traditional, JIT/lean, and TOC) are explored in addressing this dilemma with respect to the use of both protective inventory and protective capacity. Second, given an unbalanced re-entrant line with fixed capacity, simulation is used to explore the effectiveness of using protective inventory by changing the level of WIP on two dependent variables: cycle time and throughput. Two sources of variation are simulated: processing time and breakdowns (machine failures). At a given WIP level, it was found that the amount of protective capacity at non-bottlenecks changed with increases in variability. Therefore the level of WIP inventory (with its protective inventory) and the level of protective capacity needed to protect against variability play a critical role in determining cycle time and throughput of the re-entrant line. While this is an exploratory study, comments on protective inventory and protective capacity are provided based on the three different management philosophies.