COMBINED MTS AND MTO SYSTEM DESIGN PROJECT FOR VITRA
Scope of the Project
The determination of an integrated and a well-planned system that will result in the right kind and the right amount of inventory by using an upper-code based forecasting system, a dynamic programming model and programming language programs to decide which products to manufacture.
Problem Definition
Three significant problems:
• Inefficient finished goods inventory
• Lack of inventory coordination between manufactured goods (ceramics) and materials supplied from outside sources
• Excessive finished goods inventory
Inefficient Finished Goods Inventory:
The inefficiency of inventory means that a product with less chance of being sold might be manufactured, so the inventory variety might be undesirable. Any changes in a stage may not be recognized by next stages that causes slow response time. The plannings of molding, glazing and assembly are based on different planning horizon and different code-levels.
Lack of Inventory Coordination:
There is incoordination between the assembly and components supply planning departments. This is caused by long lead times of some components that are supplied from abroad and the lack of a forecasting system based on the upper-code level, which is where the customer orders are taken. Because of this absence, components supply department may be too late to order a part, or may order excessively in order not to be late and can cause too much inventory.
Excessive Finished Goods Inventory:
Company policy is to utilize the resources fully; therefore the molds that are attached to the trays are used until the end of their lifetime. This utilization results in a continuous production and as a result, increasing inventory.
Proposed System/Solution Approaches
• Dynamic Programming Model
With dynamic programming, the amount of components ordering and their safety stocks are calculated according to new production system. Since the upper-code level products are stated in advance, the component planning should be made accurately and compatible with the coming production level, which can be considered as the solution to lack of inventory coordination among manufactured goods and components.
• Improved Spreadsheet Design for Production Planning
The spreadsheet design of the current system is conducted manually by using different planning horizon and different pages which contains different code-levels. We offer that all stages which are molding, glazing and assembly can be followed and controlled by using one page automatically. This provides more accurate information flow between stages and synchronized planning.