On Postponed Production Optimization for Two-stage Supply Chain in Mass Customization

Transcription

1 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): On Postponed Poduction Optimization fo Two-stage Supply hain in ass ustomization Guangxing Wei, Danping Xiong School of anagement, hongqing Jiaotong Univesity hongqing, , hina School of anagement, hongqing Jiaotong Univesity hongqing, , hina Abstact ost models wee built fo both taditional supply chain envionment and mass customization envionment. Then, the queuing theoy of extending // model is used to optimize the total cost. Though simulation the lowest cost fo both situations was exploed, and the esults show that etaile's odeing stategy as well as the location of the ODP has significant influence on the total cost. t can povide theoetical suppot fo manufactues to locate the ODP point coectly, and also povide a basis fo maing a decision in implementing postponed stategy fo manufactues. Keywods: Postponed poduction, Supply chain, ost Optimization, ueuing Theoy, ustome ode decoupling point. ntoduction n the cuent maet envionment, consume demand is becoming pesonalized and divesified inceasingly with lage fluctuations. n the taditional mode of poduction, supply chain node entepises plan and aange poduction accoding to maet demand foecast and ode infomation, so thee ae a lot of uncetainty factos. Postponement poduction is an effective stategy to achieve mass customization, which can delay the final customization activity until the cetain ode is eceived, and by doing thi the postponement stategy can povide the diffeentiated, low-cost, high-quality final poducts fo final maet, and impove the economy pofit fo each supply chain node entepise Su, 005). As a well-nown fashion band, Levi is facing the apid change of maet demand and the shotening life cycle, it moves the ODP ustome Ode Decoupling Point, ODP) to the end of poduction poces that is to say, Levi poduce the standad poduct in the fist place, and then finish the customization activity accoding to the demand fo colo and size of pant which can educe the inventoy level and the uncetain is. Thee have been many eseaches focusing on the postponement stategy. The postponed poduction is applied by etaile to incease the pofit, but the manufactue is ignoed Yang et al., 009). The inventoy managing stategy model is set in supply chain applying postponed stategy, but the total poduction cost was not consideed Shao, 004 and Ji, 009). Jin et al. 0) poposed the method of Kanban to achieve customization, but they didn t analyze whethe the Kanban system can educe the cost of manufactue in the quantitative way. Lee and Tang 999) implemented the postponed poduction by estuctue the poduct potfolio and set an simple model by combing the pofit, cost and poduct stategy, and the model was an geneal postponed poduction model to achieve customization, but in thei model, they thought the manufactue need diffeent pocesses to obtain the customization afte the ODP ustome Ode Decoupling Point). Hua 007) optimized the flexible poduction system by queue theoy. Van 998), Kajewsi 005) and ao 007) eseach the postponed poduction in tems of simple customization and mass customization, but the ey to thei poblem is whethe the manufactue can educe cost by customized postponement. Huang et al. 008) compaed the cost change befoe and afte the ODP, but they ignoed the payment of custome waiting cost to eep the custome puchasing the poduct. Dan 009) set the cost optimization model fo the two-stage supply chain made up of etaile and manufactue applying postponed poduction, and Li 00) set the simila model and ODP oientation model, but both of them didn t conside the cost change befoe and afte the ODP only fo the manufactue, i.e. they didn t compae the cost change in diffeent condition in applying postponed poduction o not applying the postponed stategy. Due to postponed poduction will lead to additional pacaging, stoage, loading and unloading, as well as the need to incease the stoage space to stoe custom pats and geneal intemediate poduct and may need to intoduce flexible equipment to complete the customized manufactuing at the location close to the custome, which maes postponed poduction cost may be highe than non-postponed poduction, so it is necessay to analyze and compae the opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

2 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): cost unde non-postponed poduction and postponed poduction in the supply chain made up of the manufactue and etaile. This pape will focus the two-stage supply chain made up of a manufactue and a etaile based on the eseach of Dan 009) and Li 00), and set the cost model when the manufactue in postponed poduction and without the postponed poduction non-postponed poduction) espectively in the fist place. And then we will adopt the extended //mode in queue theoy to simulate the total postponed poduction cost in supply chain and obtain the esult that the ode stategy of etaile and the optimal location of ODP will tae impotant influence on the total cost of supply chain. Finally, the sensitive analysis of ode stategy of etaile safe inventoy quantity and ode quantity) and the optimal location of ODP on the total cost is povided.. The Basic ode of Supply hain ost. otation ) The notation elative to manufactue, m ), v, h ), and, ] ) is the unit aveage eaching atio, unit aveage manufactue cost, aveage holding cost of pocessing poduct, aveage inventoy cost and expected inventoy level espectively. is the expected demand of standad poduct.,, m,, v,, T, ] and w, is the aveage eaching atio, unit aveage manufactue cost, aveage holding cost of pocessing poduct, expected poduction time and unit waiting cost of the K th final poduct, and, is the expected demand of the K th final poduct. F) denote the investment cost of implementing postponed poduction. ) The notation elative to etaile b, d, h,, a and f denote the unit ode cost, aveage ode fequency, unit inventoy cost, aveage inventoy level, unit shotage cost and aveage shotage atio of the etaile espectively.. The model unde the non-postponed poduction mode Assumption ) The manufactue will face the uncetain maet demand and poduce inds of customized poducts belonged to the same poduct family while eeping some safe inventoy. Each ind of poduct need time T to be finished. The custome demand of the K th customized poduct is a andom vaiable whose aveage value is, and the vaiant value is,,. The aveage demand amount of total customized poducts is D,, whee, is the unit demand eaching atio of the K th poduct. ) The etaile face the final maet diectly, and the ode stategy will be adopted, and Pi is the pobability when the inventoy is i i 0, s ). 3) Only the fom postponement is consideed, but not the time and place postponement, so the tanspotation time between two entepises can be ignoed. The location of ODP can be denoted as the atio of poduction time of standad poduct to the total poduction time, i.e. 0 ), and 0 denote the nonpostponement stategy. odel Fo quantitative eseach of cost optimization of poduction cost of supply chain, we conside the total cost in an ode cycle including manufactue cost and etaile cost ). Unde the non-postponement stategy, the cost model is as, ) ) T The total cost of manufactue in a poduction cycle should include manufactue cost, holding cost of pocessing poduct and inventoy cost. The cost of etaile should include ode cost, inventoy cost and shotage cost. So,, ) s and ) can be denoted as ) s m v h,,, ),, ), ), ), ) ) b d a f h 3) As a esult, the fomula ) can be denoted as:, T,,, m, v,, ) opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

3 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): h b d h a f 4) s.t. 0 5) 0 s 6), 0 7),, n the fomula 4) :,, m,, v, and h, is coesponding to manufactue cost of the K th customized poduct, holding cost of pocessing poduct and inventoy cost. b d, h and a f denote the ode cost, inventoy cost and shotage cost of the K th customized poduct. onstaint 5) denotes the initial stage of ODP in non-postponement, i.e. 0, and onstaint 6) denote the ode quantity should be bigge than safety inventoy unde ode stategy s,. onstaint 7) denotes the poduction ate is bigge than ode eaching ate, so thee is no baclog ode..3 The model unde the postponed poduction mode Assumption ) The manufactue will face the uncetain maet demand and poduce inds of customized poducts belonged to the same poduct family by postponed poduction. The investment cost that the manufactue invest in the equipment so as to implement postponed poduction is F ). Each ind of poduct need timet to be finished. The poduction time can be divided into two pats: befoe ODP, the pushed poduction pocess needs time T, and afte ODP, the pulled poduction pocess needs time T. The custome demand of the K th customized poduct is a andom vaiable whose aveage value is,, and the vaiant value is,. The aveage demand amount of total customized poducts is D., ) Each ind of poduct need timet to be finished. The poduction time can be divided into two pats: befoe ODP, the pushed poduction pocess needs timet, and afte ODP, the pulled poduction pocess needs timet. The location of ODP can be denoted as the atio of poduction time of standad poduct to the total poduction time, i.e. 0 ). 3) The etaile implement zeo inventoy stategy, and he ode poduct fom manufactue accoding to customized custome ode, and all the poducts poduced by manufactue will sold by etaile. odel The cost model unde postponement stategy is as, ) 8) T The manufactue should conside the total cost in a poduction cycle including investment cost, manufactue cost befoe and afte ODP, holding cost of pocessing poduct and inventoy cost. etaile should conside the ode cost and custome waiting cost, so and ) can be denoted as F ), m, m, ) ), v ) v, h,, ], b,, w, T, ] 0) The fomula 8) can be optimized and denoted as T F ), m, m, ) ), v v, h,, ] ), b w T ] ) ),,,, 9) s.t. 0, ) ) ), 0, 3), s 0, 4) n fomula ): F) is the investment cost, ) m ) and ) m ) is the manufactuing,, cost befoe and afte ODP,, v and v, is the holding cost of, pocessing poduct befoe and afte ODP. h ) ] ) is the expected inventoy cost of,, standad poduct, b ) is the ode cost of the K th, opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

4 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): poduct, and ) w T ] ) is the custome,,, waiting cost povided by etaile to eep custome. onstaint ) denotes the location of ODP can be at andom stage in the whole poduction pocess. onstaint 3) denotes the poduction intension of manufactue is bigge than the eaching atio of custome demand, which indicate that the ovestoc condition will not be appeaed. onstaint 4) denotes the zeo inventoy stategy of etaile, safety inventoy is zeo and only one poduct is odeed at one time. 3. // model 3. Assumption Demand fo the poduct can be egaded as basic to meet independence, common chaacteistics and obey Possion distibution. The poduction ule adopts the fist come fist seve, and the second stage of manufactue can be seen as a // queuing system. Fo simple analysi we will add some assumptions: ) All the customized poducts ae belonged to the same poduct family K, and thus each customized poducts ae simila and have the same poduction time, so we can assume that,,,, m,, v,, T, ] can be equal,, m ), v and E [ T ] ) espectively. ) With the location of ODP moving to the end of poduction poces moe pocess will be standad and modula, and the manufactue cente finishing moe standad semi-finished poducts need be moe flexible, leading the inceasing investment cost. We can assume F) is the simple inceasing function of. The customized poducts of poduct family ae not the high additional-value poduct, and the incemental pocess is a continuous and even pocess of poduction time, i.e. m ), ) ae the simple inceasing functions h, of, and m ) is the simple deceasing functions of. 3) The unit inventoy cost of poduct in etaile and manufactue is same, so fo andom poduct, b, h, a, d, and f is equal asb, h, a, d, and f espectively. 3. odel d P s i f P E T s, s ] s s ) - )DT - )DT - )DT s T- )[ ) ] We can obtain the efficiency index befoe and afte ODP accoding to the eseach of Buzacott and Shanthiuma 993), such as ode fequency, aveage inventoy, shotage ate, expected inventoy of standad semifinished poduct and expected poduction time in customized poduction pocess as following: - )DT 5) s s { ) [ -] } - )DT - )DT ip - )DT - )DT i 0 s ) 0 D s [ ) ] - )DT - )DT s s DT DT ) ) s DT T ) ) DT ) is the safety facto elative to inventoy befoe ODP. The queuing model unde non-postponed poduction 6) 7) 8) 9) 0) The queuing model unde non-postponed poduction can be extended as following: T Dm Dv h bd h af ) s.t. 0 ) 0 s, s Z 3) 0 DT 4) n the fomula ): the fist thee items denote the manufactue cost, holding cost of pocessing poduct and inventoy espectively. The foth item denote the ode cost, fifth item denote the holding cost and the sixth item is the shotage cost. onstaint ) denotes the location of ODP can be at andom stage in the whole poduction pocess. onstaint 3) denotes the zeo inventoy stategy of etaile, safety inventoy is a positive intege. opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

5 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): onstaint 4) denotes the poduction intension of manufactue is bigge than the eaching atio of custome demand, which indicate that the ovestoc condition will not be appeaed. The queuing model unde postponed poduction The queuing model unde postponed poduction can be extended as following: F Dm Dm DTv T - ) DTv h ] Db DwE F ) 0 m, T ; n fomula 5), F) 5) s.t. 0 6) s 0, 7) 0DT 8) v h v 9) m ) h 0 ; ) m 0 ; ) 0 30) is the investment cost caused by customization, the second and thid item is the manufactuing cost befoe and afte ODP, the fouth and fifth item is the holding cost of semi-finished poduct befoe and afte ODP, the sixth item is the inventoy cost befoe ODP, seventh item is the ode cost of etaile, and the eighth item is the custome waiting cost povided by etaile to eep custome. of etaile, and Z denote the total cost of supply chain. The cost in non-postponed poduction is elative to the inventoy stategy of etaile, and when the safety inventoy and ode quantity change, the total cost of supply chain will change, and it will incease as they incease. The minimum cost is7085.9, the safety inventoy is, and the ode quantity is The simulation expession unde postponed poduction The cost simulation is shown in figue, X denote the ODP location and Y denote the total cost of supply chain. The total cost of supply chain is a deceasing function of Fig. ost change of supply chain in non-postponed poduction Simulation Fo futhe eseach, we will apply ATLAB softwae to simulate the two models unde postponed poduction mode and non-postponed poduction, so as to compae the cost in the two diffeent poduction modes. By efeing to the data in eseach of ietze 006), the paamete value of poduction cost is as following: F 0. 5, m ), m 5, D 000, T , v 0. 4, v ) -0. 4, h 0. 5, s, 8, w 0.5, h 0. 5, b 0., a The simulation expession unde non-postponed poduction The cost simulation is shown in figue, and the axis X denotes the safety inventoy, Y denotes the ode quantity Fig. ost change of supply chain in postponed poduction 4.3 ost analysis in two poduction modes The influence of ode stategy of etaile on the total cost Fom the simulation esult, the optimal inventoy stategy of etaile is s and 0, so we can let s, 6, and analyze the total cost of supply chain. The obvious facto influencing the total cost of supply chain is the ode stategy of etaile, and the total cost change with the ode stategy, i.e. safety inventoy and ode quantity. When S and 0, the minimum cost of supply chain is Given the same ode quantity, if the safety inventoy level is highe, then the total cost of supply chain will be highe, and the opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

6 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): inventoy cost of etaile will incease. When the safety inventoy level is lowe, the total cost of supply chain will decease with ode quantity in advance and then incease with ode quantity inceasing, because when the ode quantity is small, the ode fequency of etaile will incease, which will lead to the incement of ode cost exceeding the saving of deceased inventoy, so afte the optimal point with minimum cost, as the ode fequency deceases in a ode cycle, the saving of ode cost is smalle than the incement of inventoy cost, so the total cost will incease as ode quantity incease. When the safety inventoy is high, unde the given inventoy level, the total cost of supply chain will incease as ode quantity incease. The influence of ODP on the total cost Fom the simulation, the optimal location of ODP is at the end of poduction poces so we can let 0, 0., 0.4, 0.6, 0.8, to analyze the total cost of supply chain. n table, unde postponed poduction, the ey facto influencing the cost of supply chain is ODP location, and when the ODP location moves to the end of poduction poces the custome waiting cost will decease, and the incement of othe cost of supply chain is smalle than the saving caused by custome waiting cost, so the total cost of postponed poduction system will decease and postponed poduction can educe the cost of supply chain. By compaing the table and table, the minimum cost and maximal cost unde non postponed poduction mode is s, 0 ) and s, ) espectively, and the coesponding data unde postponed poduction is ) and ). The cost unde postponed poduction is not always smalle than the cost unde non postponed poduction, fo example, when 0. 4, the cost unde postponed poduction will be bigge than 733.5, which is bigge than s, ) unde non postponed poduction, so the manufactue should choose the ight ODP so as to educe the cost of supply chain and impove the efficiency of poduction. Table : The influence of ode stategy of etaile on the total cost of supply chain unde non-postponed poduction T s opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.

7 JS ntenational Jounal of ompute Science ssue Vol. 0, ssue, o, Januay 03 SS Pint): SS Online): Table : The influence of ODP on the total cost of supply chain unde postponed poduction T onclusion This pape set the basic model and extended // queuing model unde non-postponed poduction and postponed poduction mode espectively. By solving the model and compae the total poduction cost, we found the ode stategy of etaile is the ey facto influencing the total cost of supply chain unde non postponed poduction, so we can implement effective ode stategy, such as mae sue the ight safety inventoy level and ode quantity to contol the cost within a lowe level. Unde the postponed poduction, ODP location will bing the obvious influence on the poduction cost of manufactue, and if the manufactue can t choose the ight ODP location in postponed poduction mode, then the poduction cost will exceed the cost of non-postponed poduction mode. So the manufactue should mae ight decision on the postponed poduction and choose the ight ODP location accoding to the chaacteistic of poduct and maet demand. Beside we only conside the fom postponement, the combination of fom postponement and time postponement should be consideed into the model in the futue eseach. efeences [] J.. P. Su, Y. L. hang, and Feguson a, "Evaluation of postponement stuctue to accommodate mass customization" [J], Jounal of Opeations anagement, Vol. 3, o. 3/4, 005, pp [] Z. L. Yang, and Y.. Tian, "A study of patial bacode policy unde andom demand "[J], Jounal of Systems & anagement, Vol. 8, o. 6, 009, pp [3] X. F. Shao, and J. H. Ji, "eseach on impact of postponement stategies on inventoy cost in mass customization" [J], System Engineeing Theoy ethodology Application, Vol. 3, o. 5, 004, pp [4] X. J. Xu, and W. L. Zhou, "Simulation Study on Vitual nventoy Decision aing" [J], ndustial Engineeing Jounal, Vol., o. 5, 009, pp [5]. Jin, and Z. Zhang, "A visualized e-anban system fo small batch JT poduction" [J], ndustial Engineeing Jounal, Vol. 4, o. 3, 0, pp [6] H. L. Lee, and. Tang, "odeling the costs and benefits of delayed poduct diffeentiation" [J], anagement Science, Vol. 43, o., 997, pp [7] Z. S. Hua, Flexible manufactuing systems and flexible supply chain odeling optimization [], Beijing: Science Pes 007. [8] H... Van, "Logistics and vitual integation: postponement, outsoucing and the fow of infomation"[j], ntenational Jouna of Physical Distibution & Logistics anagement, Vol. 8, o. 7, 998, pp [9] L. Kajewsi, J.. Wei, and L. L.Tang, "esponding to schedule changes in build-to-ode supply chains"[j], Jounal of Opeations anagement, Vol. 3, o. 5, 005, pp [0] K. ao, B. Dan, and Y. Liu, "eseach on cost optimization model of manufactue implementation postponement stategy in mass customization"[j], ompute ntegated anufactuing System Vol. 3, o. 9, 007, pp [] Y. Y. Huang, and S. J. Li, "Suitable application situations of diffeent postponements appoaches: Standadization vs. odulaization"[j], Jounal of anufactuing System Vol. 7, o., 008, pp. -. [] K. ao, B. Dan, and Y. Liu, "ost optimization model of supply chain implementation postponement stategy in mass customization"[j], ompute ntegated anufactuing System Vol. 5, o., 009, pp [3] D. D. Li, and J. X. Wang, "ustome ode decoupling point position fo mass customization"[j], Jounal of ingdao Univesity atual Science Edition), Vol. 3, o., 00, pp [4] S.. ietze, "ase Studies of Postponement in the Supply hain"[d], ambidge: assachusetts nstitute of Technology [5] oueddine Labiad, Zitouni Beidoui and Otmane Bousou, Evaluation of coodination contacts fo a two stage Supply hain unde pice dependent demand, ntenational Jounal of ompute Science ssue Vol. 9, o, 0, pp [6] Benaissa Ezzeddine, Benabdelhafid Abdellatif and Benaissa ouni, An Agent-based famewo fo coopeation in Supply hain, ntenational Jounal of ompute Science ssue Vol. 9, o 3, 0, pp GuangXing Wei hongqing Povince, hina. Bithdate: Aug, 977. Wo as pofesso in anagement School of hongqing Jiaotong Univesity, and eseach inteests on mass customization and supply chain management. Danping Xiong Jiangxi Povince, hina. Gaduate student in anagement School of hongqing Jiaotong Univesity, and eseach inteests on mass customization and postponement stategy. opyight c) 03 ntenational Jounal of ompute Science ssues. All ights eseved.