Multiple customer order decoupling points within a hybrid MTS/MTO manufacturing supply chain with uncertain demands in two consecutive echelons

Abstract

For decades, manufacturers have dealt with uncertain demands, and many solutions—such as manufacturing semi-finished products–have been presented to help manage the uncertainties. This paper considers the demand uncertainties in two echelons of a supply chain, unlike most of the field research, which has focused on the final customers’ demand uncertainty. In order to decrease the operating costs of a manufacturer, a model is proposed to use hybrid manufacturing in two levels of a supply chain with two echelons of manufacturers. The output of the presented model is the quantity of semi-finished products ordered to the decoupling point upstream manufacturer. The number of processes that must be done based upon Make to Stock, the order quantity of the decoupling point downstream manufacturers, and the order quantity of the final customers are obtained by the presented model as well. A numerical example and a vast sensitivity analysis are presented to better show the applicability of the presented model.