Input/Output Backlog Control and Dynamic Capacity Planning in Versatile Manufacturing Companies

Abstract

Versatile Manufacturing (or Make-to-Order) companies are in the business of supplying products in response to a customer order in competition with other companies, on the basis of price, technical expertise, delivery time and reliability in meeting due dates. The production function of such companies is often faced with unrealistic delivery dates for incoming orders. This arise when the sales force quote delivery dates and prices which will maximise the probability of winning the order. The lack of co-ordination between sales and production at the customer enquiry stage often leads to confirmed orders being delivered later than promised and/or being produced at a loss. The concentration of most past research in make-to-order manufacturing on the detailed processes of production scheduling has been misplaced. Much more is to be gained by a higher level approach of integrating marketing and production planning effort at the customer enquiry stage so that one may as far as possible avoid a lot of the detailed production scheduling problems in the first place. The aim has to be to use the process of bidding for orders to try to mould the order book into a shape that can be profitably manufactured by the production side.This paper describes a methodology and models for Backlog control to apply Input/Output control to the management of manufacturing and delivery lead times. A simulation of the performance of a simplified version of the methodology to a small subcontracting company demonstrates its value in reducing lead time variability, so improving delivery performance and/or providing greater throughput and usage of capacity.KeywordsVersatile ManufacturingMake-to-Order manufacturingmarketingproduction planningdecision support/expert systemspricinglead time management.s