A model for level-loading production in the process industries when demand is stochastic

Abstract

Recent observations of process manufacturing firms have called into question the efficacy of pursuing lean manufacturing approaches in environments where there is inherent inflexibility in the production environment. We examine a multi-item integrated production-inventory system in which changeover times are significant on the process equipment, and customer demand is highly uncertain. We develop and explore a production stabilising policy in which the length of the production cycle is kept between a lower and upper limit. We discuss how capacity utilisation and demand uncertainty interact with lower and upper limits to affect system performance. A numerical study is conducted to evaluate the accuracy of the approach.

Keywords:

• cyclic scheduling
• lot sizing
• inventory optimisation
• stable production cycles
• production smoothing
• synchronisation