Order quantities in a production line : influences on production output and lead-time

This article tests the effect of different order quantities and setup times and its dependence of maximum Work-in-Process (WIP). The main studied supply chain consists of five linked machines with a fixed setup time for every batch in every machine, and stochastic operation times for every item in the batch. Additionally three linked machines with a clear bottleneck are studied. Production management can only control maximum WIP and not average WIP. Average WIP is a consequence of released work, variations, capacity and maximum WIP. A number of test cases are made where the number of units in the machines and the buffer areas are restricted. Previous studies have shown the dominance of CONWIP over Kanban, so only situations where maximum WIP is restricted in the total production line is studied. – The results show that increased maximum WIP leads to longer average lead-time but also that its coefficient of variation increases, independent of setup time and order quantity. A literature review confirms our assumption and opinion that large variations in lead-times are worse than long lead-times. A smaller order quantity leads to a lower production rate if not the setup time is decreased proportionally. A reduction of the order quantity can also increase the lead-time and its variation. A decrease of the order quantity requires a reduction of maximum WIP to implement its advantages. Therefore, reducing order quantities but still use the same parameters in in the companies’ computer system for material- and production control will prevent improvements. It is always favourable to reduce setup times and/or variation in operation times