Dynamic TOC-based approach for planning and control of accessories in MTO environments

Abstract

In make-to-order systems, customers expect to have more freedom to choose the accessories. But demand variations and internal disorders induce some uncertainties. Hence, a different inventory system is needed for such items that dynamically manage those variations. In this paper, a dynamic approach based on the theory of constraints is proposed for inventory planning and control of accessories. First, the risk of processing time variation is balanced while keeping cycle time balancing. Second, the ribbons of buffer control charts are determined by a buffer planning model in which a multi-criteria ABC analysis is used to apply different customer service levels. To detect demand variations and monitor the buffer, trend of consumption in each monitoring window is carefully traced. Also, simulation-based procedures are recommended to update control ribbons. Comparing the performance of proposed approach to common methods using the data of an automobile company as well as several random test problems confirms that it can significantly reduce the costs and improve the efficiency of inventory system.