Case Study for Lot-sizing Problem in Mto Supply Chain Based on Simulation Optimization Approach

Recently, manufacturers are taking a hybrid approach between MTS and MTO. However, most of literature research on production planning concentrates principally on MTS systems. The MTO area has not received the same degree of attention. There are only some research papers which are based on queueing network models that explicitly talk about the Lot Sizing Problem (LSP) in MTO sector. This paper presents a case study in MTO sector for which analytical model is still extremely complex up to now (multi-stage, multi-product, multi-location, multi-resource with setup, capacity constraints and stochastic demand). The objective is to determine a fixed optimal lot size for each manufacturing product type that will ensure Order Mean Flow Time (OMFT) target value for each finished product type. The adopted approach is carried out in three steps. A Discrete Event Simulation (DES) model was firstly implemented as a tool in estimating (OMFT) performance. Secondly, Design of Experiment is applied to conduct simulation experiments. Finally, a multiple-objective optimization is achieved by applying desirability optimization methodology. The study results illustrate that the LSP in MTO sector is viable and provides a prototype for further research in supply chain co-ordination.