A virtual warehouse system for production logistics

Rapid change of product demand impacts the master production schedule and affects the stability of production. Traditional inventory planning generated by advanced planning and schedule system is inadequate to handle the effect of variability, non-linear relations, and other abrupt factors on product demand. This paper presents a virtual warehouse system (VWS) which is capable of refining inventory planning so as to streamline product planning and control if there is an abrupt change in the product demand. It can also serve as an advisory tool for supporting decision making and monitoring the inventory allocation of WIP when supply shortage occurs. The VWS is based on the concept of the postponement of product differentiation, a simulation model and knowledge-based system. The inventory, which was originally planned for current and future demands, will act as a buffer to be reallocated and to fulfil a sudden demand. The flexibility of inventory stirring is of key significance in this study. A prototype VWS was built and a successful trial implemented in a prestigious manufacturing enterprise. The results show that the inventory level across the supply chain among different parties can be minimized and the manufacture enterprise more predictable and adaptable to an abrupt change in product demand.