Make-to-stock policies for a multistage serial system under a make-to-order production environment

Abstract

Production control policies for a make-to-order manufacturing system composed of several stages under uncertain demand are considered. Conducting order-specific operations at each stage can produce a variety of final products from the same raw material. The production quantity per period at a stage depends on the workload. To shorten lead times, it is permitted to start production at upstream stages without confirmed orders, hold semi-finished items within the system as make-to-stock, and then match orders to these items under the constraints of specifications and quantities. Eight make-to-stock policies are prepared by combining buffer selection rules, matching acceptance rules, and make-to-stock replenishment rules. Their performance is evaluated via computer simulation. In the case of relatively limited capacity, aggressively matching orders to make-to-stock items are preferable in terms of the average lateness of orders and the average inventory level of the make-to-stock items. A policy that loads carefully to avoid undesirable processing delay by calculating the workload and considers the planned order quantities explicitly obtain better results under increased production capacity.