Exploring a two-product unreliable manufacturing system as a capacity constraint for a two-echelon supply chain dynamic problem

In this paper, we investigate a two-echelon, two-product Supply Chain (SC) inspired by a real-world production/distribution firm, in which the product change-over time, necessary to switch from a product to another, induces a variable capacity in the factory. Such a varying production capacity is further exacerbated by the machine breakdowns that may occur in the manufacturing system. Since the two products share the same production system, a production planning rule has to be executed to decide the change-over, i.e. to select the product to be manufactured over time. An extended experimental campaign has been performed to investigate how the fill rate and the standard deviation of inventories vary as a series of operational and tactical parameters changes. Several ANOVA analyses revealed a strong interaction between the production planning model and the adopted smoothing replenishment strategy, which remarkably affects the performance of the SC. Interestingly, a higher value of the proportional controller negatively affects the service levels since the adopted production planning policy, under these circumstances, tends to encourage longer production runs for a certain product and, consequently, persistent stock outs for the other one.

Automated summary

In this paper, a two-echelon, two-product Supply Chain is investigated, considering the impact of product change-over time and machine breakdowns on production capacity. Experimental analysis reveals the variations in fill rate and inventory standard deviation. The study highlights the interaction between production planning model and replenishment strategy, which significantly affects the performance of the Supply Chain.