Improving safety stock effectiveness and production plan stabilityby combining cyclical volume planning and fair share mix decisions

摘要

This research studies, within a semi-process production environment, two different inventory control policies forsteering the end-product lotsizing process and their effect on safety stock effectiveness and schedule stability. Amore effective safety stock guarantees less stockouts and by this a more stable production plan, since unexpectedstockouts are the main reason for short-term planning changes. The first logic is based on Economic Order Quantity(EOQ) lotsizing, treating each product independently. The second logic connects the mix-decision process with acyclical supply of intermediate product. A Fair-Share (FS) algorithm uses this supply information steering the end-productlotsizing. A simulation based experiment reveals the resulting end-product service level for both the EOQand fair-share based logic. The results indicate that end-product service level deteriorates in the case of tightcapacity limitations. This effect is the strongest when using EOQ lotsizing. Within the fair-share approach safetystock is more effective and delivers a robust end-product service level. In case the fair-share end-product lotsizing islinked with the cyclical intermediate-product volume planning, the system can smoothen out demand fluctuations tothe next planning cycle reducing nervousness for upstream operations. A stable intermediate demand pattern leads toimproved schedule stability. This schedule stability allows the consuming department to go low in stock in theperiod preceding the next cyclical intermediate product delivery. After one year of evaluation the involved companysignificantly reduced the intermediate product safety stock. The combination of cyclical volume planning and fair-sharemix decisions acts as a powerful shock absorber improving safety stock effectiveness and production planstability.