Scalable material assignment methods for build-to-order environments

Kaipei Chen, Scott A. Moses and P. Simin Pulat

European Journal of Industrial Engineering, 2007, vol. 1, issue 1, 74-92

Abstract: This paper develops scalable and effective yet simple heuristic methods for material assignment in a large discrete Build-To-Order (BTO) environment. The material assignment function allocates available supplies of raw material to orders over a period of time. Despite popular belief to the contrary, Material Requirements Planning (MRP) does not perform material assignment. As a result, material supplies are by default consumed by orders on a First Come First Served (FCFS) basis and this allows low priority orders to obtain material instead of high priority orders. We develop heuristic methods that consider priority when performing material assignment and study their effectiveness using total weighted tardiness, total tardiness, fraction of orders that are tardy and computational time as performance measures. The material assignment problem is formulated as a transportation problem to obtain a lower bound for the heuristics in terms of total weighted tardiness. Simulation results show that one of the heuristics yields solutions whose total weighted tardiness is within about 0.25% of the optimal solution, yet is very scalable and able to quickly assign materials in realistically sized systems with many tens of thousands of orders.

Keywords: material requirements planning; MRP; material planning; material assignment; build-to-order; BTO; resource allocation; scalability; industrial engineering; total weighted tardiness. (search for similar items in EconPapers)
Date: 2007
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