Abstract
Lack of homogeneity in the product (LHP) is a problem when customers require homogeneous units of a single product. In such cases, the optimal allocation of inventory to orders becomes much more complex. Furthermore, in an MTS environment, an optimal initial allocation may become less than ideal over time, due to different circumstances. This problem occurs in the ceramics sector, where the final product varies in tone and calibre. This paper proposes a methodology for the reallocation of inventory to orders in LHP situation (MERIO-LHP) and a model-based decision-support system (DSS) to support the methodology, which enables an optimal reallocation of inventory to order lines to be carried out in real businesses environments in which LHP is inherent. The proposed methodology and model-based DSS were validated by applying it to a real case at a ceramics company. The analysis of the results indicates that considerable improvements can be obtained with regard to the quantity of orders fulfilled and sales turnover.
Highlights
In a make-to-stock (MTS) strategy, production planning is based on a forecast of demand [1]
In order to analyse the improvement obtained with the decision-support system (DSS), a comparison of the initial situation, following a First Come First Served (FCFS) policy, and the result after applying the MERIO-LHPO and the DSS was made
The reason for this is that inventory allocations for orders that will be fulfilled in the long term are replaced with allocations for orders that must be fulfilled in the short term
Summary
In a make-to-stock (MTS) strategy, production planning is based on a forecast of demand [1]. At a particular time, this optimal allocation may become less than ideal, due to unforeseen circumstances within the company In this case a reallocation of inventory to orders will be necessary. Methodology and model-based DSS to managing the reallocation of inventory to orders Such a circumstance may occur in any industry, but it is frequent in some areas of manufacturing, in which, due to the nature of their products and/or their production processes, there is a lack of homogeneity in the product (LHP). The LHP present makes optimal stock allocation a much more complex task and, as a result, a mathematical model for the reallocation of inventory to orders becomes necessary. The employment of the model-based DSS in a real case study, carried out in order to validate it, is described and the conclusions of the study are presented
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