Integrated optimisation for production capacity, raw material ordering and production planning under time and quantity uncertainties based on two case studies

Abstract This paper develops a supply chain (SC) model by integrating raw material ordering and production planning, and production capacity decisions based upon two case studies in manufacturing firms. Multiple types of uncertainties are considered; including: time-related uncertainty (that exists in lead-time and delay) and quantity-related uncertainty (that exists in information and material flows). The SC model consists of several sub-models, which are first formulated mathematically. Simulation (simulation-based stochastic approximation) and genetic algorithm tools are then developed to evaluate several non-parameterised strategies and optimise two parameterised strategies. Experiments are conducted to contrast these strategies, quantify their relative performance, and illustrate the value of information and the impact of uncertainties. These case studies provide useful insights into understanding to what degree the integrated planning model including production capacity decisions could benefit economically in different scenarios, which types of data should be shared, and how these data could be utilised to achieve a better SC system. This study provides insights for small and middle-sized firm management to make better decisions regarding production capacity issues with respect to external uncertainty and/or disruptions; e.g. trade wars and pandemics.</jats:p

Evaluation of Pull Production Control Strategies Under Uncertainty: An Integrated Fuzzy Ahp-Topsis Approach

Purpose: Just-In-Time (JIT) production has continuously been considered by industrial practitioners and researchers as a leading strategy for the yet popular Lean production. Pull Production Control Policies (PPCPs) are the major enablers of JIT that locally control the level of inventory by authorizing the production in each station. Aiming to improve the PPCPs, three authorization mechanisms: Kanban, constant-work-in-process (ConWIP), and a hybrid system, are evaluated by considering uncertainty. Design/methodology/approach: Multi-Criteria Decision Making (MCDM) methods are successful in evaluating alternatives with respect to several objectives. The proposed approach of this study applies the fuzzy set theory together with an integrated Analytical Hierarchy Process (AHP) and a Technique for Order Performance by Similarity to Ideal Solution (TOPSIS) method. Findings: The study finds that hybrid Kanban-ConWIP pull production control policies have a better performance in controlling the studied multi-layer multi-stage manufacturing and assembly system. Practical implications: To examine the approach a real case from automobile electro-mechanical part production industry is studied. The production system consists of multiple levels of manufacturing, feeding a multi-stage assembly line with stochastic processing times to satisfy the changing demand. Originality/value: This study proposes the integrated Kanban-ConWIP hybrid pull control policies and implements several alternatives on a multi-stage and multi-layer manufacturing and assembly production system. An integrated Fuzzy AHP TOPSIS method is developed to evaluate the alternatives with respect to several JIT criteriaPeer Reviewe

Optimal Cyclic Control of a Buffer Between Two Consecutive Non-Synchronized Manufacturing Processes

This thesis presents methods for efficiently controlling a buffer that is located between two non-synchronized manufacturing processes. Several machines with different cycle times and/or batch sizes perform each manufacturing process. The overall operation cycles every T time units. The first objective of the problem is to minimize the average buffer inventory level during one cycle. The second objective is to minimize the maximum inventory level observed at any point during the cycle. This new optimization problem has not been previously considered in the literature. An integer program is developed to model this problem. In addition, two heuristic methods—a simulated annealing algorithm and random algorithm—are devised for addressing this problem. Extensive experiments are conducted to compare the performance of four methods for attacking this problem: pure integer programming using the solver CPLEX; integer programming where CPLEX is initialized with a feasible solution; simulated annealing; and a random algorithm. The advantages and disadvantages of each method are discussed

Towards Robustness Of Production Planning And Control Against Supply Chain Disruptions

Just-in-time supply chains have become increasingly popular in past decades. However, these are particularly vulnerable when logistic routes are blocked, manufacturing capacities are limited or customs are under strain, as has been seen in the last few years. The principle of just-in-time delivery requires a coordinated production and material flow along the entire supply chain. Challenges in the supply chain can lead to various disruptions, so that certain manufacturing jobs must be changed, postponed or cancelled, which will then impact supply down the line up to the consumer. Nowadays, many planning and control processes in the event of a disturbance are based on the procedural knowledge of employees and undertaken manually by those. The procedures to mitigate the negative effects of disturbances are often quite complex and time-critical, making disturbance management highly challenging. In this paper, we introduce a real-world use case where we automate the currently manual reschedule of a production plan containing unavailable jobs. First, we analyse existing literature regarding the classification of disturbances encountered in similar use cases. We show how we automate existing manual disturbance management and argue that employing stochastic optimization allows us to not only promote future jobs but to on-the-fly create entirely new plans that are optimized regarding throughput, energy consumption, material waste and operator productivity. Building on this routine, we propose to create a Bayesian estimator to determine the probabilities of delivery times whose predictions we can then reintegrate into our optimizer to create less fragile schedules. Overall, the goals of this approach are to increase robustness in production planning and control

Towards robustness of production planning and control against supply chain disruptions

Just-in-time supply chains have become increasingly popular in past decades. However, these are particularly vulnerable when logistic routes are blocked, manufacturing capacities are limited or customs are under strain, as has been seen in the last few years. The principle of just-in-time delivery requires a coordinated production and material flow along the entire supply chain. Challenges in the supply chain can lead to various disruptions, so that certain manufacturing jobs must be changed, postponed or cancelled, which will then impact supply down the line up to the consumer. Nowadays, many planning and control processes in the event of a disturbance are based on the procedural knowledge of employees and undertaken manually by those. The procedures to mitigate the negative effects of disturbances are often quite complex and time-critical, making disturbance management highly challenging. In this paper, we introduce a real-world use case where we automate the currently manual reschedule of a production plan containing unavailable jobs. First, we analyse existing literature regarding the classification of disturbances encountered in similar use cases. We show how we automate existing manual disturbance management and argue that employing stochastic optimization allows us to not only promote future jobs but to on-the-fly create entirely new plans that are optimized regarding throughput, energy consumption, material waste and operator productivity. Building on this routine, we propose to create a Bayesian estimator to determine the probabilities of delivery times whose predictions we can then reintegrate into our optimizer to create less fragile schedules. Overall, the goals of this approach are to increase robustness in production planning and control

Warehousing and Inventory Management in Dual Channel and Global Supply Chains

More firms are adopting the dual-channel supply chain business model where firms offer their products to customers using dual-channel sales (to offer the item to customers online and offline). The development periods of innovative products have been shortened, especially for high-tech companies, which leads to products with short life cycles. This means that companies need to put their new products on the market as soon as possible. The dual-channel supply chain is a perfect tool to increase the customer’s awareness of new products and to keep customers’ loyalty; firms can offer new products online to the customer faster compared to the traditional retail sales channel. The emergence of dual-channel firms was mainly driven by the expansion in internet use and the advances in information and manufacturing technologies. No existing research has examined inventory strategies, warehouse structure, operations, and capacity in a dual-channel context. Additionally, firms are in need to integrate their global suppliers base; where the lower parts costs compensate for the much higher procurement and cross-border costs; in their supply chain operations. The most common method used to integrate the global supplier base is the use of cross-dock, also known as Third Party Logistic (3PL). This study is motivated by real-world problem, no existing research has considered the optimization of cross-dock operations in terms of dock assignment, storage locations, inventory strategies, and lead time uncertainty in the context of a cross-docking system. In this dissertation, we first study the dual-channel warehouse in the dual-channel supply chain. One of the challenges in running the dual-channel warehouse is how to organize the warehouse and manage inventory to fulfill both online and offline (retailer) orders, where the orders from different channels have different features. A model for a dual-channel warehouse in a dual-channel supply chain is proposed, and a solution approach is developed in the case of deterministic and stochastic lead times. Ending up with numerical examples to highlight the model’s validity and its usefulness as a decision support tool. Second, we extend the first problem to include the global supplier and the cross-border time. The impact of global suppliers and the effect of the cross-border time on the dual-channel warehouse are studied. A cross-border dual-channel warehouse model in a dual-channel supply chain context is proposed. In addition to demand and lead time uncertainty, the cross-border time is included as stochastic parameter. Numerical results and managerial insights are also presented for this problem. Third, motivated by a real-world cross-dock problem, we perform a study at one of the big 3 automotive companies in the USA. The company faces the challenges of optimizing their operations and managing the items in the 3PL when introducing new products. Thus, we investigate a dock assignment problem that considers the dock capacity and storage space and a cross-dock layout. We propose an integrated model to combine the cross-dock assignment problem with cross-dock layout problem so that cross-dock operations can be coordinated effectively. In addition to lead time uncertainty, the cross-border time is included as stochastic parameter. Real case study and numerical results and managerial insights are also presented for this problem highlighting the cross-border effect. Solution methodologies, managerial insights, numerical analysis as well as conclusions and potential future study topics are also provided in this dissertation

Determining Kanban Size Using Mathematical Programming and Discrete Event Simulation for a Manufacturing System with Large Production Variability

In order to become more competitive and aggressive in the market place it is imperative for manufacturers to reduce cycle time, limit work-in-process, and improve productivity, responsiveness, capacities, and quality. One manner in which supply chains can be improved is via the use of kanbans in a pull production system. Kanbans refer to a card or signal for productions scheduling within just-in-time (JIT) production systems to signal where and what to produce, when to produce it, and how much. A Kanban based JIT production system has been shown to be beneficial to supply chains for they reduce work-in-process, provide real time status of the system, and enhance communication both up and down stream. While many studies exist in regards to determining optimal number of kanbans, types of kanban systems, and other factors related to kanban system performance, no comprehensive model has been developed to determine kanban size in a manufacturing system with variable workforce production rate and variable demand pattern. This study used Stewart-Marchman-Act, a Daytona Beach rehabilitation center for those with mental disabilities or recovering from addiction that has several manufacturing processes, as a test bed sing mathematical programming and discrete event simulation models to determine 2 the Kanban size empirically. Results from the validated simulation model indicated that there would be a significant reduction in cycle time with a kanban system; on average, there would be a decrease in cycle time of nine days (almost two weeks). Results were discussed and limitations of the study were presented in the end

Optimising Supply Chain Performance via Information Sharing and Coordinated Management

Supply chain management has attracted much attention in the last decade. There has been a noticeable shift from a traditional individual organisation-based management to an integrated management across the supply chain network since the end of the last century. The shift contributes to better decision making in the supply chain context, as it is necessary for a company to cooperate with other supply chain members by utilising relevant information such as inventory, demand and resource capacity. In other words, information sharing and coordinated management are essential mechanisms to improve supply chain performance. Supply chains may differ significantly in terms of industry sectors, geographic locations, and firm sizes. This study was based on case studies from small and medium sized manufacturing supply chains in People Republic of China. The study was motivated by the following facts. Firstly, small and medium enterprises have made a big contribution to China’s economic growth. Several studies revealed that most of the Chinese manufacturing enterprises became aware of the importance of supply chain management, but compared to western firms, the supply chain management level of Chinese firms had been lagging behind. Research on supply chain management and performance optimisation in Chinese small and medium sized enterprises (SMEs) was very scarce. Secondly, there had been plenty of studies in the literature that focused on two or three level supply chains whilst considering a number of uncertain factors (e.g. customer demand) or a single supply chain performance indicator (e.g. cost). However, the research on multiple stage supply chain systems with multiple uncertainties and multiple objectives based on real industrial cases had been spared and deserved more attention. One reason was due to the lack of reliable industrial data that required an enormous effort to collect the primary data and there was a serious concern about data confidentiality from the industry aspect. This study employed two SME manufacturing companies as case studies. The first one was in the Aluminium industry and another was in the Chemical industry. The aim was to better understand the characteristics of the supply chains in Chinese SMEs through performing in-depth case studies, and built models and tools to evaluate different strategies for improving their supply chain performance. The main contributions of this study included the following aspects. Firstly, this study generalised a supply chain model including a domestic supply chain part and an international supply chain part based on deep case studies with the emphasis on identifying key characteristics in the case supply chains, such as uncertainties, constraints and cost elements in association with flows and activities in the domestic supply chain and the international supply chain. Secondly, two important SCM issues, i.e. the integrated raw material procurement and finished goods production planning, and the international sales planning, were identified. Thirdly, mathematical models were formulated to represent the supply chain model taking into account multiple uncertainties. Fourthly, several operational strategies utilising the concepts of just-in-time, safety-stock/capacity, Kanban, and vendor managed inventory, were evaluated and compared with the case company's original strategy in various scenarios through simulation methods, which enabled quantification of the impact of information sharing on supply chain performance. Fifthly, a single objective genetic algorithm was developed to optimise the integrated raw material ordering and finished goods production decisions under (s, S) policy (a dynamic inventory control policy), which enabled the impact of coordinated management on supply chain performance to be quantified. Finally, a multiple objectives genetic algorithm considering both total supply chain cost and customer service level was developed to optimise the integrated raw material ordering and finished goods production with the international sales plan decisions under (s, S) policy in various scenarios. This also enabled the quantification of the impact of coordinated management on supply chain performances