Abstract
We consider a single-stage multiproduct manufacturing facility producing several end-products for delivery to customers with a required customer lead-time. The end-products can be split in two classes: few products with high volume demands and a large number of products with low-volume demands. In order to reduce inventory costs, it seems efficient to produce the high-volume products according to an MTS policy and the low volume products according to an MTO policy. The purpose of this paper is to analyze and compare the impact of the scheduling policy on the overall inventory costs, under customer lead-time service level constraints. We consider two policies: the classical FIFO policy and a priority policy (PR) which gives priority to low volume products over high volume products. We show that for some range of parameters, the PR rule can significantly outperform the FIFO rule. In these ranges, the service level constraints are satisfied by the PR rule with much lower inventory costs.
Highlights
The outline of this paper and some of the results are as follows: we investigate the structure of the optimal policy MTO or MTS, in a multiproduct single-stage manufacturing system
This paper has analyzed the performance of a finite single-stage manufacturing facility producing multiple heterogeneous items that fall into two product families: high volume and low volume products
The production orders are issued according to a base-stock level policy and scheduled following a FIFO rule or a preemptive priority rule PR, giving the highest priority to low volume items
Summary
In a marketplace which is increasingly customer oriented, competitive manufacturers have to propose a large variety of products, at low prices, and be able to deliver them to the customers in order to meet the required lead-times. In a context where all products are low volume high variety products with reasonably large customer lead-times, the MTO policy has to be used. There are two main issues that need to be investigated, in a combined way, regarding this approach which consists of mixing MTS and MTO policies: the scheduling rule used to process production orders in case of congestion at the manufacturing facility, and the impact of the customer lead-time values. Priority in terms of production capacity would be given to the MTO products so that to achieve a low customer lead-time, while the MTS products could be produced with less reactivity without causing damage to the final customers since they are held in stock This situation can be encountered in B2B as well as B2C contexts. We propose a simple analytical approximation, providing explicit overall insight
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