Strategic Inventory Positioning in BOM with Multiple Parents Using ASR Lead Time

Abstract

In order to meet the lead time that the customers require, work-in-process inventory (WIPI) is necessary at almost every station in most make-to-order manufacturing. Depending on the station network configuration and lead time at each station, some of the WIPI do not contribute to reducing the manufacturing lead time of the final product at all. Therefore, it is important to identify the optimal set of stations to hold WIPI such that the total inventory holding cost is minimized, while the required due date for the final product is met. The authors have presented a model to determine the optimal position and quantity of WIPI for a given simple bill of material (S-BOM), in which any part in the BOM has only one immediate parent node. In this paper, we extend the previous study to the general BOM (G-BOM) in which parts in the BOM can have more than one immediate parent and present a new solution procedure using genetic algorithm.

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.…”

“…In the deterministic SIP problem addressed in our earlier papers [13,14], the ASR lead time of the end product (W) can be determined as a value, depending on the binary solution X = { }, since all processing times are deterministic. So a solution X = { } is feasible if is not greater than Q, the lead time the customer requires.…”

“…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.…”