International Journal of Technology, Modeling and Management vol:1 issue:1 pages:11-25
The paper presents a robust operational planning procedure for a make-to-order environment. The procedure successively takes into account order deadlines (lead time offsetting process), allows for capacity flexibility and aims at minimizing set-ups. The novelty of the procedure lies in the use of realistic lead time estimates (including capacity losses) for the lead time offsetting process used to trigger the release of production orders on the shop floor. This way, it overcomes one of the major shortcomings of traditional ERP systems: the shop floor planning becomes more robust (there is less need for changes to the plan) and system performance is improved (total lead times are reduced, while customer service levels increase). The lead time estimates are obtained through rough cut modelling approximations. The performance of the procedure is determined by means of a trace-driven simulation model, based on data from a real-life company. The results indicate that the use of realistic lead time estimates in the planning procedure enhances system performance (in terms of total lead time and customer service level). The results also show valuable insights into the advantages of interchangeable lines, the importance of the planning period, and the dangers of inappropriate batch sizing decisions. The procedure can substantively improve transparency, knowledge and information management for the company and its supply chain partners by integrating it as a fine-tuning tool in an enhanced ERP system.