Strategic Inventory Positioning for MTO Manufacturing Using ASR Lead Time

In most Make-To-Order manufacturing, work-in-process (WIP) inventory is usually piled up at almost every station in the factory in order to quickly meet the urgent request from the immediate downstream station. Depending on the station network configuration and lead time at each station, some of the WIP inventories do not contribute to reducing the manufacturing lead time of the final product at all. Therefore, it is important to identify the minimum set of stations to hold WIP inventory such that the total inventory holding cost is minimized, while the required due date for the final product is met. In this study, we present a model to determine the optimal position and quantity of WIP inventory for a given bill of material using the actively synchronized replenishment (ASR) lead time; and present a solution procedure using genetic algorithm.