The project is conducted in a multi-item-multi-stage manufacturing system with high volume products. The objectives are to optimize the inventory structure and improve production scheduling process. The stock building plan is studied carefully to understand the demand seasonality characteristics and the planning guidelines that the factory is currently following. A new base stock policy is introduced to the 5 focused production stages to establish a demand driven system with controlled inventory and new rules to guide the daily production. The line coupling concept is also added to further refine the inventory structure. After that, the production leveling method is employed to help reduce the variation of daily production targets. Finally, a Kanban system is designed to facilitate the demand driven manufacturing under the operation of the new base stock policy. With the appropriate inventory control and production scheduling policy, the overall inventory level in the factory is reduced by 61% based on calculation, leading to a savings of 70% of the total inventory cost. Moreover, the establishment of Kanban system has simplified the daily manufacturing activity on the operation level and helped the factory become a lean manufacturer.
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