Forecasting lead times of production orders in SME’s

Abstract

The paper presents a procedure for forecasting the lead times of production orders on the basis of past actual lead time data. A customer for a particular production order will select the best bidder. It is rather risky to make a bid just on the basis of sales experience. A procedure is therefore proposed by which, on the basis of the actual lead times of operational and assembly orders processed in the company's workplaces in the past, the expected lead time of a planned production order can be forecasted. The result of the proposed procedure for forecasting lead times is an empirical distribution of possible lead times for a production order. On the basis of this distribution, it is possible to forecast the probable lead time of a production order, taking into account a confidence interval. Using the proposed procedure, the sales department can make a delivery time forecast for the customer of the planned production order. As an illustration of using the procedure for forecasting lead times of production orders, a case study is presented: lead time of production order for the "tool for manufacturing the filter casing" was forecasted; the tool is manufactured by a Slovenian company.