Production planning system for a combination of make-to-stock and make-to-order products

This paper deals with the problem of designing a production planning system for a combination of make-to-stock (MTS) and make-to-order (MTO) products where the production facility produces both types of products. Important management points in such production systems are to design an efficient production planning system which can shorten the manufacturing time of MTO products as well as controlling the unfilled rate of MTS products to the market demand at a low level. A hierarchical production planning model is introduced in order to design the production planning system. The buffer capacity is set as a design variable for determining production capacity at a higher planning level, and the rule for allocating the production capacity to types of products is adopted as a design variables at a lower level. First, we analyse how these two design variables affect the unfilled rate of MTS products and the average manufacturing time of MTO products. Second, we clarify the relationship of the buffer capacity with the manufacturing time of MTO products and with the required buffer inventory level of MTS products which can maintain the unfilled rate of MTS products to the market demand within an acceptable limit. Third, we show an example of the range of design variables which can control the unfilled rate of MTS products and the manufacturing time of MTO products within their acceptable limits, if the individual limits of the performance measure are given to respond to customer orders quickly.