Procedure for reducing the risk of delayed deliveries in make-to-order production

Abstract

Make-to-order production is generally operated in a very unpredictable and competitive environment, where the key factors to succeed are to provide high service levels and flexibility while at the same time offering inexpensive products. To receive customers, production companies must often promise short lead-times and the option of adjustable order quantities and delivery dates. Coping with uncertainty and variable demand is a challenging task. With the additional challenge of cutting down the production costs to be able to provide inexpensive products, proper planning and scheduling of the production becomes very difficult and crucial for success. It is therefore of crucial importance to develop systematic methods to address the problem of planning and scheduling under uncertainty in order to create efficient and reliable plans and thereby reduce the risk of delayed deliveries of customer orders. This study introduces the subject of creating robust production plans and schedules in the typical modern production environment characterised by several important sources of uncertainty. We introduce an efficient and practical modelling approach for creating robust production plans under uncertain and varying demand conditions. As an inspiration we have a large real-world problem originating from a complex pharmaceutical enterprise.