Periodical capacity setting methods for make-to-order multi-machine production systems

The paper presents different periodical capacity setting methods for make-to-order, multi-machine production systems with stochastic customer required lead times and stochastic processing times to improve service level and tardiness. These methods are developed as decision support when capacity flexibility exists, such as, a certain range of possible working hours a week for example. The methods differ in the amount of information used whereby all are based on the cumulated capacity demand at each machine. In a simulation study the methods impact on service level and tardiness is compared to a constant provided capacity for a single and a multi-machine setting. It is shown that the tested capacity setting methods can lead to an increase in service level and a decrease in average tardiness in comparison to a constant provided capacity. The methods using information on processing time and customer required lead time distribution perform best. The results found in this paper can help practitioners to make efficient use of their flexible capacity.