A Study on Designing Production Planning System for a Combination of Make-to-Stock and Make-to-Order : A Study on Hierarchical Production Planning System

Abstract

This paper clarifies the relationship among the unfilled-rate for make-to-stock (MTS) products, the average lead time for make-to-order (MTO) products and the slack capacity as buffer in common with MTS and MTO products in the production system with a combination of MTS and MTO products and present a guide for making policies for the manufacturing system. As a result, we present a guide for making the manufacturing goals such as setting the manufacturing leadtime for MTO products and the unfilled-rate for MTS products to gain an advantage in competitive business environment. A hierarchical production planning model is introduced for the production system which is composed of two-stage fabrication/assembly process. The slack capacity is set as a decision variable at a higher planning level and the charged rate of MTO products to the quantity of MTS products for the production process is set as a decision variable at a lower planning level, and we analyze how these two variables affect the unfilled-rate for MTS products and the average lead time for MTO products.