Integrated management of inventory and production systems based on floating decoupling point and real-time information: A simulation based analysis

Globalisation has transformed market conditions reducing lead times and increasing both the degree of product differentiation and price competition. To cope with this issue, new hybrid order fulfilment strategies have emerged which integrate the Make to Stock (MTS) and Build to Order (BTO) strategies, and whose aim is to simultaneously improve opposite objectives, such as the stock level and the lead time. Furthermore, companies face frequent challenges of sharing updated information and avoiding the lack of coordination between the different company subsystems. This work focuses on relatively recent fulfilment strategies based on the Floating Decoupling Point (FDP) which uses real time information to operate. The main objectives of this work are the study of the influence of different sources of real-time information about the available products and select the most suitable configuration of these systems, regarding the inventory control policy and the source of real-time information. The stochastic nature of the process makes simulation an appropriate tool to achieve valuable results. The simulation studies have been carried out following a full factorial Design of Experiments (DoE). Experimental results show that the strategies based on the FDP are very sensitive to the real-time information. These systems achieve the best performance when the inventory control policy uses simultaneously demand forecasting and real-time information of available products corresponding to the Work-In-Process (WIP) and Finished Goods Inventory (FGI). In contrast, system performance deteriorates significantly when real-time information of available products in the WIP has not been taken into account.