Strategic Inventory Positioning for MTO Manufacturing Using ASR Lead Time

Abstract

In most Make-To-Order manufacturing, work-in-process (WIP) inventory is usually piled up at almost every station in the factory in order to quickly meet the urgent request from the immediate downstream station. Depending on the station network configuration and lead time at each station, some of the WIP inventories do not contribute to reducing the manufacturing lead time of the final product at all. Therefore, it is important to identify the minimum set of stations to hold WIP inventory such that the total inventory holding cost is minimized, while the required due date for the final product is met. In this study, we present a model to determine the optimal position and quantity of WIP inventory for a given bill of material using the actively synchronized replenishment (ASR) lead time; and present a solution procedure using genetic algorithm.

Integrated production-distribution planning optimization models: A review in collaborative networks context

“…X X X X X X X X AO/ Branch and Bound Florez et al (2015) X X X X X X X X X X X AO/ Branch and Bound Santoso et al (2005) X X X X X X X X X X X X AH/Decomposition and Aggregation Rim et al (2014) X X X X X X X X X X AM/ Genetic Alg. distribution operations to customers, over the planning horizon.…”

Strategic WIP Inventory Positioning for Make‐to‐Order Production with Stochastic Processing Times

“…In the authors' earlier works [13,14], the concept of a new lead time has been introduced, namely, actively synchronized replenishment lead time (ASRLT), which was proposed by Ptak and Smith [1], in which ASRLT is defined as "the longest unprotected or unbuffered sequence in the BOM for a particular parent." The strategic inventory positioning (SIP) problem is to determine the locations which hold WIP inventory in order to meet the lead time the customer requires for the final product, while minimizing the total inventory holding cost.…”

“…For consistency, we will use in this paper the same BOM and notations as used in the previous papers [13,14] as follows:…”

“…In our earlier papers [13,14], all the processing times are assumed to be deterministic, so the minimum total inventory holding cost is also a deterministic value. In this paper, however, the processing times are assumed to follow normal distributions.…”

“…Many other researchers studied the inventory positioning problem using different methods such as Kaminsky and Kaya [9], Inderfurth [10], Alderson [11], and Georage et al [12]. We also have studied SIP problem for simple and general BOM using actively synchronized replenishment (ASR) lead time proposed in the DDMRP [13,14], in which we present mathematical models and genetic algorithm to solve SIP problems, assuming that the processing times are all deterministic. However, it will be more realistic in most cases to consider the processing times to be stochastic due to various factors such as defectives, reprocessing, equipment setup, and/or calibration time variations.…”