A study on value setting of product functional specifications with consideration of parts and inventory costs for engineer-to-order production

To deal with various customers' requirements within short delivery time, the engineer-to-order (ETO) companies have to prepare a large variety of parts in advance, which increase the parts inventory costs. To alleviate this problem, value setting of product functional specifications is focused. If the value set for each product functional specifications item can be decreased, then, number of parts types and the parts inventory including safety stock can be reduced. On the contrary, parts costs increase because more parts with higher specifications are required. Since a product has multiple specification items and for each item dozens of values exist, therefore the value setting (selection) problem has a large number of solution combination. In this paper, calculation procedure based on genetic algorithm is proposed. A case study of drilling machines is conducted. Results show that decreasing value sets for product functional specifications can reduce the total costs of parts and inventory.

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