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

Abstract

It is vital for make-to-order manufacturers to shorten the lead time to meet the customers' requirements. Holding work-in-process (WIP) inventory at more stations can reduce the lead time, but it also brings about higher inventory holding cost. Therefore, it is important to seek out the optimal set of stations to hold WIP inventory to minimize the total inventory holding cost, while meeting the required due date for the final product at the same time. Since the problem with deterministic processing times at the stations has been addressed, as a natural extension, in this study, we address the problem with stochastic processing times, which is more realistic in the manufacturing environment. Assuming that the processing times follow normal distributions, we propose a solution procedure using genetic algorithm.

Demand Driven Material Requirements Planning (DDMRP): A systematic review and classification

“…In continuity with this work, Jiang and Rim (2016) extended the previous study to the general BOM(G-BOM), in which parts can have more than one immediate parent. Jiang and Rim (2017) addressed the same issue by introducing the stochastic processing times character. Other papers (Shofa & Widyarto, 2017;Shofa et al, 2018;Velasco-Acosta et al, 2019;Pekarčíková et al, 2019) discuss the buffer positioning problem without proposing new approaches.…”

Demand Driven MRP – The need to standardise an implementation process.

“…Two of the studies analyse the changes implemented and the qualitative and quantitative results obtained by several companies following their conversion from traditional or classical models to the DDMRP model (Bahu et al, 2019;Kortabarria et al, 2018). An additional three articles (Jiang & Rim, 2017Lee & Rim, 2019) introduce mathematical models to define the positioning of inventory, depending on the circumstances of different organisations. Related to the implementation process, another article proposes a dynamic adjustment of the decoupled lead time, taking into account lead time variability (Dessevre Research area Representative articles Results DDMRP benefits, theoretical or simulated (Velasco Acosta et al, 2019) This article evaluates the applicability of DDMRP in a complex manufacturing situation in terms of customer satisfaction and stock levels.…”

“…The paper provides a systematic solution process to determine the best location of the buffer in the make-to-order manufacturing process to minimise the total inventory cost. (Jiang & Rim, 2017) The authors created a mathematical model to position the work in progress, the quantity of work for on-demand orders and random processing times. The paper addresses the problem of defining the stations to hold work-inprocess inventory to reduce the production lead-time.…”