Capacity coordination in hybrid make-to-stock/make-to-order production environments

One of the most important decisions in hybrid make-to-stock/make-to-order (MTS/MTO) production systems is capacity coordination. This paper addresses capacity coordination of hybrid MTS/MTO production systems which deal with MTS, MTO and MTS/MTO products. The proposed model is developed to cope with order acceptance/rejection policy, order due-date setting, lot-sizing of MTS products and determining required capacity during the planning horizon. Additionally, a backward lot-sizing algorithm is developed to tackle the lot-sizing problem. The proposed model presents a general framework to decide on capacity coordination without too many limiting mathematical assumptions. The model combines qualitative and quantitative modules to cope with the aforementioned problems. Finally, a real industrial case study is reported to provide validity and applicability of the proposed model. Having the model applied in the case study, considerable improvement was achieved.