Capacity-based order review/release strategies to improve manufacturing performance

Given the increased emphasis by manufacturing organizations to reduce work-in-progress inventories thereby shortening their manufacturing lead times, more attention is being given to the control of the materials released to the shop floor. The control of input into the shop is one of the activities associated with order review/release (ORR). A common assumption of the published literature on ORR is that all orders received by the shop will be accepted, regardless of shop conditions. In this paper, this assumption is relaxed such that in times of high shop congestion, it may be better to reject an order to allow the customer to seek another supplier than to accept the order and deliver it to the customer late. When the shop is highly congested, accepting all orders will jeopardize the ability of the shop to meet customer due dates. In an industry that demands fast and reliable turnaround of customer orders, not meeting due dates may result in customers placing their orders with other more reliable suppliers. Of course, rejecting the order outright will also have some negative effects. The best alternative would depend on the preferences by managers and the tradeoffs involved between rejecting the order or accepting the order and then not meeting the customer due date. Three methods to determine whether or not to accept the order were tested in this research. Results suggest the consideration of shop loads is better than a random rejection in determining whether an order should be accepted or rejected by the shop. Also, an analysis of the load on the orders routeing is more effective than considering the overall load in the shop.