Research Article

Production line performance analysis within a MTS/MTO manufacturing framework: a queueing theory approach

Ghalehkhondabi, Iman; Suer, Gursel

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Abstract: Paper aims: Mixing the Make-To-Stock (MTS) and Make-To-Order (MTO) strategies to benefit from the both manufacturing systems in an environment with impatient customers.

Originality: This is the first research article which uses the queuing theory to find the best place of the Order Penetration Point (OPP) in a production line with impatient customers.

Research method: Two scenarios are studied in this paper. 1- Semi-finished products are produced and stored in a buffer. No semi-finished product will be completed until a specific order comes to the system. This strategy leads to idle cost, but there is savings obtained in terms of eliminating investment in finished goods inventory and its holding cost. We can calculate the total cost of the system and find the optimal machine for the buffer of semi-finished products. 2- We use both MTS and MTO for completing the semi-finished products. When there is no customer in the system, semi-finished products are completed based on the MTS strategy and finished products are sent to a warehouse. But, when an order comes in for customization, a semi-finished product get assigned to that order and after finishing the current MTS job on each machine, this MTO job starts to complete the semi-finished product. To calculate system performance indexes, we use the Matrix Geometric Method (MGM) after modeling the systems with queuing theory concepts.

Main findings: Numerical examples show the convexity of total cost in terms of product completion percentage and number of customization lines after the OPP. Also, increasing the production rate leads to higher expected number of semi-finished products in the buffer.

Implications for theory and practice: Positioning OPP in manufacturing systems to compare different production strategies (MTS/MTO) has not been widely studied yet. This paper shows how manufacturing companies can apply the OPP to obtain benefits from both MTS and MTO strategies according to various cost parameters of the production lines. Using queuing theory concepts to model the problem under study helps to consider the external factors such as impatient customers and demand arrival uncertainty that can affect the performance measures of the system besides the internal factors such as production rate and inventory related costs. The idea of expanding the production line after a specific station and have more customization lines to improve customer satisfaction is studied in this paper as well.


Performance analysis, Order Penetration Point (OPP), Make to Stock (MTS), Make to Order (MTO), Queuing theory


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