Flexible lot sizing in hybrid make-to-order/make-to-stock production planning

Bart Beemsterboer, Martin Land, Ruud Teunter*

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

34 Citations (Scopus)
101 Downloads (Pure)

Abstract

Hybrid make-to-order/make-to-stock production systems are difficult to control. Batch production of make-to-stock products allows for efficient capacity usage, but fixed batch sizes can make the system less responsive to make-to-order customers. Using Markov Decision Process modeling, we show that the optimal policy for such hybrid systems varies the lot size in response to make-to-order backlogs as well as stock levels. We evaluate the performance of this flexible lot sizing policy for a two-product hybrid system. We find that it leads to savings of up to 23% compared to policies that use either completely or partly fixed lot sizes. We also find that flexible lot sizing is especially beneficial for systems with a low load and where make-to-stock is important in terms of production capacity usage and cost. (C) 2017 Elsevier B.V. All rights reserved.

Original languageEnglish
Pages (from-to)1014-1023
Number of pages10
JournalEuropean Journal of Operational Research
Volume260
Issue number3
DOIs
Publication statusPublished - 1-Aug-2017

Keywords

  • Production
  • Production planning
  • Lot sizing
  • Hybrid production
  • Markov Decision Process
  • MACHINE PRODUCTION SYSTEMS
  • SCHEDULING PROBLEM
  • STOCHASTIC DEMANDS
  • INVENTORY
  • RULES
  • MODEL
  • ITEM
  • MTO

Cite this