Performance Analysis of Hybrid MTS/MTO Systems with Stochastic Demand and Production

Dieter Fiems, Eline De Cuypere, Koen De Turck and Dieter Claeys
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Dieter Fiems: Department of Telecommunications and Information Processing, Ghent University, 9000 Ghent, Belgium
Eline De Cuypere: Department of Telecommunications and Information Processing, Ghent University, 9000 Ghent, Belgium
Koen De Turck: Department of Telecommunications and Information Processing, Ghent University, 9000 Ghent, Belgium
Dieter Claeys: Department of Industrial Systems Engineering (ISyE), Flanders Make, Ghent University, 9000 Ghent, Belgium

Mathematics, 2020, vol. 8, issue 11, 1-16

Abstract: We present a comprehensive numerical approach with reasonably light complexity in terms of implementation and computation for assessing the performance of hybrid make-to-stock (MTS)/make-to-order (MTO) systems. In such hybrid systems, semi-finished products are produced up front and stored in a decoupling inventory. When an order arrives, the products are completed and possibly customised. We study this system in a stochastic setting: demand and production are modelled by random processes. In particular, our model includes two coupled Markovian queues: one queue represents the decoupling inventory and the other the order backlog. These queues are coupled as order processing can only occur when both queues are non-empty. We rely on matrix analytic techniques to study the performance of the MTO/MTS system under non-restrictive stochastic assumptions. In particular, we allow for arrival correlation and non-exponential setup and MTS and MTO processing times, while the hybrid MTS/MTO system is managed by an ( s , S ) -type threshold policy that governs switching from MTO to MTS and back. By some numerical examples, we assess the impact of inventory control, irregular order arrivals, setup and order processing times on inventory levels and lead times.

Keywords: decoupling inventory; performance evaluation; stochastic modelling; Markov process (search for similar items in EconPapers)
JEL-codes: C (search for similar items in EconPapers)
Date: 2020
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