TY - JOUR
T1 - A comparison of make-to-stock and make-to-order in multi-product manufacturing systems with variable due dates
AU - Altendorfer, Klaus
AU - Minner, Stefan
N1 - Funding Information:
Stefan Minner is a Full Professor for Logistics and Supply Chain Management at TUM School of Management, Technische Universität München. He studied Business Administration at the University of Biele-feld and received his doctoral degree from the University of Magdeburg. He was a postdoctoral researcher at the University of Calgary and has held positions at the universities of Paderborn, Mannheim, and Vienna. His primary research interests are logistics network design under uncertainty, supply chain coordination, and inventory management. He currently serves as the Editor-in-Chief of OR Spectrum and is a member of several other editorial boards. He is the president of the International Society for Inventory Research and a member of the advisory board of the German Operations Research Society, the scientific advisory board of the German Logistics association, and the Research Committee of the European Logistics Association.
Copyright:
Copyright 2014 Elsevier B.V., All rights reserved.
PY - 2014/3/4
Y1 - 2014/3/4
N2 - This article models a single-stage hybrid production system, which can be regarded as a Make To Order (MTO) production system with safety stocks or a Make To Stock (MTS) production system with advance demand information. In an environment with multiple products and variable customer due dates, optimality conditions for safety stocks (base stocks) and safety lead times (work-ahead window) that minimize inventory and backorder costs are derived. For a simplified M/M/1 system with exponentially distributed customer required lead time, an explicit comparison between MTO and MTS is conducted. A pure MTO policy gets relatively more favorable to a pure MTS policy if inventory holding costs increase, backorder costs decrease, the mean customer required lead time increases, or the processing rate increases. In a numerical study, the influence of variance, the behavior of optimal parameters, and the cost reduction potential of this hybrid policy are shown.
AB - This article models a single-stage hybrid production system, which can be regarded as a Make To Order (MTO) production system with safety stocks or a Make To Stock (MTS) production system with advance demand information. In an environment with multiple products and variable customer due dates, optimality conditions for safety stocks (base stocks) and safety lead times (work-ahead window) that minimize inventory and backorder costs are derived. For a simplified M/M/1 system with exponentially distributed customer required lead time, an explicit comparison between MTO and MTS is conducted. A pure MTO policy gets relatively more favorable to a pure MTS policy if inventory holding costs increase, backorder costs decrease, the mean customer required lead time increases, or the processing rate increases. In a numerical study, the influence of variance, the behavior of optimal parameters, and the cost reduction potential of this hybrid policy are shown.
KW - make-to-order
KW - make-to-stock
KW - manufacturing system control
KW - Manufacturing system design
KW - multi-product production system
KW - queuing
KW - variable due dates
UR - https://www.scopus.com/pages/publications/84890380927
U2 - 10.1080/0740817X.2013.803638
DO - 10.1080/0740817X.2013.803638
M3 - Article
SN - 0740-817X
VL - 46
SP - 197
EP - 212
JO - IIE Transactions (Institute of Industrial Engineers)
JF - IIE Transactions (Institute of Industrial Engineers)
IS - 3
ER -