Dynamic safety stock in co-production demand-driven wood remanufacturing mills: A case study

Rezvan Rafiei, Mustapha Nourelfath, Jonathan Gaudreault, Luis Antonio De Santa-Eulalia and Mathieu Bouchard

International Journal of Production Economics, 2015, vol. 165, issue C, 90-99

Abstract: This paper studies the production planning problem of a wood remanufacturing mill involved with uncertain demands, a co-production system, sequence-dependent setup times and finite production capacity. The objective is to increase the service level and to keep the stock in a reasonable size. A mathematical model which includes a sequence-dependent setup time formulation is sketched as a base case. It is used with a periodic re-planning strategy. Then, in order to benefit from the idle production capacity, we propose a two-phase method combined with the periodic re-planning strategy. This method uses the idle production capacity in each period to build up safety stocks for the most important products. A simulation model is proposed to compare the performance of three variations of the method using industrial data. Numerical results indicate that the solutions of the proposed two-phase method are superior to the optimal solution of the base case model. Moreover, it is found that although the entire production capacity is used in the two-phase method, the stock size is negligibly augmented in the co-production system.

Keywords: Uncertain demand; Co-production; Sequence-dependent setup time; Production capacity constraint; Safety stock; Wood remanufacturing industry (search for similar items in EconPapers)
Date: 2015
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:165:y:2015:i:c:p:90-99

DOI: 10.1016/j.ijpe.2015.03.024

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