Priority allocation decisions in large scale MTO/MTS - Multi-product manufacturing systems: technical report

Cahier de Recherche du Groupe HEC Paris, n° 905Cahier de Recherche du Groupe HECWe consider a single stage multi-product manufacturing facility producing a large number of end-products for delivery within a service constraint for the customer lead-time. The manufac- turing facility is modeled as a multi-product, multi-priority queuing system. In order to reduce inventory costs, an e±cient priority allocation between items consists in producing some items according to a Make-To-Stock (MTS) policy and others according to a Make-To-Order (MTO) policy depending on their features (costs, required lead-time, demand rates). We propose a general optimization procedure that gives a near-optimal °ow control (MTO or MTS) to as- sociate with each product and the corresponding near-optimal priority strategy. We illustrate e±ciency of our procedure via several examples and by a numerical analysis. In addition, we show numerically that a small number of priority classes is su±cient to obtain near-optimal performances