Revenue Management in Make-To-Order Manufacturing: Case Study of Capacity Control at ThyssenKrupp VDM

While revenue management (RM) is traditionally considered a tool of service operations, RM shows considerable potential for application in manufacturing operations. The typical challenges in make-to-order manufacturing are fixed manufacturing capacities and a great variety in offered products, going along with pronounced fluctuations in demand and profitability. Since Harris and Pinder in the mid-90s, numerous papers have furthered the understanding of RM theory in this environment. Nevertheless, results to be expected from applying the developed methods to a practical industry setting have yet to be reported. To this end, this paper investigates a possible application of RM at ThyssenKrupp VDM, leading to considerable improvements in several areas.

Improving business processes in a globally dispersed make-to-order supply chain. Case study on outbound logistics in a Multinational Corporation

The purpose of this thesis is to find out how outbound logistics process can be improved by reducing unnecessary waste in a globally dispersed make-to-order (MTO) supply chain. The research problem was addressed by a multinational corporation that aims to find a solution for reducing unnecessary waste in their outbound logistics process. The focus is on customized products that are delivered via sea transportation. Theoretical framework for improving outbound logistics processes in globally dispersed MTO supply chain was created based on business process management, Porter’s value chain theory, value stream mapping and current reality tree. The empirical research was conducted by using constructive approach due to its ability to research a practical problem and to improve the existing practices. The data was collected from ten semi-structured interviews and three non-participant observations. By analysing the data and applying the theoretical framework, five types of waste were detected in the process that were seen to derive from six root causes. Practical solution was constructed to reduce the waste in the process by combining the existing literature with the ideas raising from empirical data. The results of this thesis suggest that a MNC with a globally dispersed MTO supply chain can improve its outbound logistics process by applying activities that enhance internal and external integration, collaboration and coordination, and increase predictability of the process. This research has practical relevance both for the case company as well as for other MNCs with globally dispersed MTO supply chains that aim to improve their outbound logistics processes. This research contributes to the BPM and CRA research by providing an evidence for their applicability in the new context.

Planning of a make-to-order production process in the printing industry

Offset printing is a common method to produce large amounts of printed matter. We consider a real-world offset printing process that is used to imprint customer-specific designs on napkin pouches. The production equipment used gives rise to various technological constraints. The planning problem consists of allocating designs to printing-plate slots such that the given customer demand for each design is fulfilled, all technological and organizational constraints are met and the total overproduction and setup costs are minimized. We formulate this planning problem as a mixed-binary linear program, and we develop a multi-pass matching-based savings heuristic. We report computational results for a set of problem instances devised from real-world data.

The order selection and lot sizing problem in the make-to-order environment

This research is motivated by the need for considering lot sizing while accepting customer orders in a make-to-order (MTO) environment, in which each customer order must be delivered by its due date. Job shop is the typical operation model used in an MTO operation, where the production planner must make three concurrent decisions; they are order selection, lot size, and job schedule. These decisions are usually treated separately in the literature and are mostly led to heuristic solutions. The first phase of the study is focused on a formal definition of the problem. Mathematical programming techniques are applied to modeling this problem in terms of its objective, decision variables, and constraints. A commercial solver, CPLEX is applied to solve the resulting mixed-integer linear programming model with small instances to validate the mathematical formulation. The computational result shows it is not practical for solving problems of industrial size, using a commercial solver. The second phase of this study is focused on development of an effective solution approach to this problem of large scale. The proposed solution approach is an iterative process involving three sequential decision steps of order selection, lot sizing, and lot scheduling. A range of simple sequencing rules are identified for each of the three subproblems. Using computer simulation as the tool, an experiment is designed to evaluate their performance against a set of system parameters. For order selection, the proposed weighted most profit rule performs the best. The shifting bottleneck and the earliest operation finish time both are the best scheduling rules. For lot sizing, the proposed minimum cost increase heuristic, based on the Dixon-Silver method performs the best, when the demand-to-capacity ratio at the bottleneck machine is high. The proposed minimum cost heuristic, based on the Wagner-Whitin algorithm is the best lot-sizing heuristic for shops of a low demand-to-capacity ratio. The proposed heuristic is applied to an industrial case to further evaluate its performance. The result shows it can improve an average of total profit by 16.62%. This research contributes to the production planning research community with a complete mathematical definition of the problem and an effective solution approach to solving the problem of industry scale.

Branch and price solution approach for order acceptance and capacity planning in make -to -order operations

The increasing emphasis on mass customization, shortened product lifecycles, synchronized supply chains, when coupled with advances in information system, is driving most firms towards make-to-order (MTO) operations. Increasing global competition, lower profit margins, and higher customer expectations force the MTO firms to plan its capacity by managing the effective demand. The goal of this research was to maximize the operational profits of a make-to-order operation by selectively accepting incoming customer orders and simultaneously allocating capacity for them at the sales stage. ^ For integrating the two decisions, a Mixed-Integer Linear Program (MILP) was formulated which can aid an operations manager in an MTO environment to select a set of potential customer orders such that all the selected orders are fulfilled by their deadline. The proposed model combines order acceptance/rejection decision with detailed scheduling. Experiments with the formulation indicate that for larger problem sizes, the computational time required to determine an optimal solution is prohibitive. This formulation inherits a block diagonal structure, and can be decomposed into one or more sub-problems (i.e. one sub-problem for each customer order) and a master problem by applying Dantzig-Wolfe’s decomposition principles. To efficiently solve the original MILP, an exact Branch-and-Price algorithm was successfully developed. Various approximation algorithms were developed to further improve the runtime. Experiments conducted unequivocally show the efficiency of these algorithms compared to a commercial optimization solver.^ The existing literature addresses the static order acceptance problem for a single machine environment having regular capacity with an objective to maximize profits and a penalty for tardiness. This dissertation has solved the order acceptance and capacity planning problem for a job shop environment with multiple resources. Both regular and overtime resources is considered. ^ The Branch-and-Price algorithms developed in this dissertation are faster and can be incorporated in a decision support system which can be used on a daily basis to help make intelligent decisions in a MTO operation.^

Branch and Price Solution Approach for Order Acceptance and Capacity Planning in Make-to-Order Operations

The increasing emphasis on mass customization, shortened product lifecycles, synchronized supply chains, when coupled with advances in information system, is driving most firms towards make-to-order (MTO) operations. Increasing global competition, lower profit margins, and higher customer expectations force the MTO firms to plan its capacity by managing the effective demand. The goal of this research was to maximize the operational profits of a make-to-order operation by selectively accepting incoming customer orders and simultaneously allocating capacity for them at the sales stage. For integrating the two decisions, a Mixed-Integer Linear Program (MILP) was formulated which can aid an operations manager in an MTO environment to select a set of potential customer orders such that all the selected orders are fulfilled by their deadline. The proposed model combines order acceptance/rejection decision with detailed scheduling. Experiments with the formulation indicate that for larger problem sizes, the computational time required to determine an optimal solution is prohibitive. This formulation inherits a block diagonal structure, and can be decomposed into one or more sub-problems (i.e. one sub-problem for each customer order) and a master problem by applying Dantzig-Wolfe’s decomposition principles. To efficiently solve the original MILP, an exact Branch-and-Price algorithm was successfully developed. Various approximation algorithms were developed to further improve the runtime. Experiments conducted unequivocally show the efficiency of these algorithms compared to a commercial optimization solver. The existing literature addresses the static order acceptance problem for a single machine environment having regular capacity with an objective to maximize profits and a penalty for tardiness. This dissertation has solved the order acceptance and capacity planning problem for a job shop environment with multiple resources. Both regular and overtime resources is considered. The Branch-and-Price algorithms developed in this dissertation are faster and can be incorporated in a decision support system which can be used on a daily basis to help make intelligent decisions in a MTO operation.

Virtual manufacturing:a study of some important issues relating to the transformation of traditional manufacturing organisations

This thesis starts with a literature review, outlining the major issues identified in the literature concerning virtual manufacturing enterprise (VME) transformation. Then it details the research methodology used – a systematic approach for empirical research. next, based on the conceptual framework proposed, this thesis builds three modules to form a reference model, with the purpose of clarifying the important issues relevant to transforming a traditional manufacturing company into a VME. The first module proposes a mechanism of VME transformation – operating along the VME metabolism. The second module builds a management function within a VME to ensure a proper operation of the mechanism. This function helps identify six areas as closely related to VME transformation: lean manufacturing; competency protection; internal operation performance measurement; alliance performance measurement; knowledge management; alliance decision making. The third module continues and proposes an alliance performance measurement system which includes 14 categories of performance indicators. An analysis template for alliance decision making is also proposed and integrated into the first module. To validate these three modules, 7 manufacturing organisations (5 in China and 2 in the UK) were investigated, and these field case studies are analysed in this thesis. The evidence found in these organisations, together with the evidence collected from the literature, including both researcher views and literature case studies, provide support for triangulation evidence. In addition, this thesis identifies the strength and weakness patterns of the manufacturing companies within the theoretical niche of this research, and clarifies the relationships among some major research areas from the perspective of virtual manufacturing. Finally, the research findings are summarised, as well as their theoretical and practical implications. Research limitations and recommendations for future work conclude this thesis.

Development of a platform for lean manufacturing simulation games

More than ever, the economic globalization is creating the need to increase business competitiveness. Lean manufacturing is a management philosophy oriented to the elimination of activities that do not create any type of value and are thus considered a waste. One of the main differences from other management philosophies is the shop-floor focus and the operators' involvement. Therefore, the training of all organization levels is crucial for the success of lean manufacturing. Universities should also participate actively in this process by developing students' lean management skills and promoting a better and faster integration of students into their future organizations. This paper proposes a single realistic manufacturing platform, involving production and assembly operations, to learn by playing many of the lean tools such as VSM, 5S, SMED, poke-yoke, line balance, TPM, Mizusumashi, plant layout, and JIT/kanban. This simulation game was built in tight cooperation with experienced lean companies under the international program “Lean Learning Academy,”http://www.leanlearningacademy.eu/ and its main aim is to make bachelor and master courses in applied sciences more attractive by integrating classic lectures with a simulated production environment that could result in more motivated students and higher study yields. The simulation game results show that our approach is efficient in providing a realistic platform for the effective learning of lean principles, tools, and mindset, which can be easily included in course classes of less than two hours.

Aplicação de princípios e técnicas de Lean Manufacturing para melhoria do desempenho de linhas de montagem

Dissertação de mestrado integrado em Engenharia e Gestão Industrial

Ferramentas do Lean Manufacturing aplicadas em uma indústria de luminária

Due to globalization, is increasingly common for companies to make their products more competitive. With this background, the industries seek more efficient ways to produce. This paper aims to examine the tools of Lean Manufacturing applied in an industry luminaries ,addressing the positive aspects. Were applied tools like value stream mapping, Kanban, setup reduction and 5S program. With the application of these tools obtained improvements in processes, reducing lead time from factory and reducing the cost of the luminaries

Implementação da metodologia lean manufacturing em uma linha de produção por meio de certificação interna

To the companies maintain competitive in the market, they need continuous improvement in quality and productivity. This continuous improvement can be achieved through lean manufacturing tools. The idea of lean manufacturing is to map the flow to identify the processes that don’t add value in the final product, according the customer specification, in others words is eliminate or reduce the waste on the production flow. However the implementation of lean manufacturing is not so simple and involves the resistance of the employees, lack of training and the lack of knowledge to make the implementation. The objective of this study is determinate the good practices and difficulties found by a multinational company in the field of healthy that aims implementing the Lean Manufaturing through an internal certification. The methodology used to approach the problem is a case of study that analyzes the information introduced through discussion made by a semi structured interview. The case study describes the steps to get the certification, involving the concepts of 5S, balancing, standardization and routine management. The literature and the study case showed that the good practices, such as productivity increases, safety level increases and the machine stability were accomplished, but the majority difficulties was found in cultural factors and planning. Some recommendations were proposed to the others companies, such as the elaboration of a qualification matrix and the review of the activities chronogram during the implementation. The way that the company found to implement Lean Manufacturing concepts was a creative method to show to everybody the objective and the target to be accomplished and is one way to recognize the effort through the certification

Jogos Sérios para Lean Manufacturing: “Jogo: Método 5S”

A crise económica global que se faz sentir leva a que surja uma necessidade de aumentar a competitividade das empresas, através da melhoria de performance dos seus colaboradores. Nesse sentido, Lean Manufacturing é uma área que merece a atenção das empresas e dos seus colaboradores, uma vez que os seus principais objectivos são o aumento da produtividade, a redução dos desperdícios e a optimização dos recursos disponíveis. Uma ferramenta do Lean que merece especial destaque é o Método 5S, que permite aumentar a produtividade através do aumento da organização do posto de trabalho. Uma vez que usar postos de trabalho a mais, de modo a que os colaboradores pratiquem e aprendam a aplicar as regras do 5S, fica dispendioso em tempo de trabalho e custos acrescidos pela paragem da linha produção, surge a necessidade de criação de um Jogo Sério que ajude na aprendizagem destes temas. Um breve estudo do mercado revelou que esta necessidade não está a ser devidamente respondida. Existem algumas entidades que se dedicam ao ensino e partilha deste tipo de conhecimentos, sendo poucas as que têm ferramentas digitais disponíveis. Esta dissertação propõe um Jogo Sério que pretende dar resposta a esta necessidade, permitindo pôr em prática o Método 5S, servindo ainda como ferramenta motivadora, para que o colaborador aprofunde o seu conhecimento na matéria. Esta abordagem prática encoraja o jogador a aprender por tentativa e erro. Informações mostradas ao longo do jogo permitem uma aprendizagem sem haver uma sobrecarga cognitiva. A avaliação do jogo, realizada por um grupo de alunos que frequentam o Mestrado em Engenharia Mecânica, demonstrou que a nossa abordagem é eficiente e resulta na aprendizagem dos conceitos 5S.