Hybrid MTO-MTS production planning: An explorative study

Bart Beemsterboer*, Martin Land, Ruud Teunter

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

38 Citations (Scopus)
286 Downloads (Pure)

Abstract

Research on the planning and control of combined make-to-order/make-to-stock or hybrid production systems often takes a typical MTO or MTS perspective. We examine the benefits of a hybrid planning approach without priority for either MTO or MTS. We develop a Markov Decision Process model for a two-product hybrid system to determine when to manufacture MTS and MTO products. Contrary to earlier studies with this approach, this study includes a positive lead time for MTO products. We characterize optimal policies and show how decisions should be based on both inventory level and backlog state of MTO products. Especially discriminating between states with and states without backlog of MTO orders is shown to be important in determining whether to increase MTS stock. Savings of up to 65 percent are achieved compared to policies that prioritize MTS or MTO. (C) 2015 Elsevier B.V. and Association of European Operational Research Societies (EURO) within the International Federation of Operational Research Societies (IFORS). All rights reserved.

Original languageEnglish
Pages (from-to)453-461
Number of pages9
JournalEuropean Journal of Operational Research
Volume248
Issue number2
DOIs
Publication statusPublished - 16-Jan-2016

Keywords

  • Production
  • Planning
  • Hybrid production
  • MTO-MTS production
  • Markov Decision Process
  • MAKE-TO-ORDER
  • LOT SCHEDULING PROBLEM
  • PRODUCTION SYSTEM
  • STOCK PRODUCTION
  • STOCHASTIC DEMAND
  • INVENTORY
  • INDUSTRY
  • POLICIES
  • RULES
  • MODEL

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