Order release in the hybrid MTO-FTO production

In this paper, we analyse and compare the impact of the choice of the release method in a hybrid make-to-order (MTO)-finish-to-order (FTO) production system composed of two stages. The study is motivated by a practical problem from the aluminium profiles manufacturing industry, where for shortening throughput times it is allowed to start production of standard and regular items without confirmed orders, holding a stock of semi-finished products. The first stage manufactures both, items to order and items to a stock of semi-finished products, while the second stage is a customization stage based on customer demand requests and specifications. The paper addresses the questions of where order release control should be exercised, i.e., at only one stage or at both stages, and when should it be exercised. Simulation results suggest that load-based order release can be successfully applied to this hybrid production system when combined with a replenishment control policy for semi-finished products. Load-based order release contributes to reduce the total throughput time and the percentage of tardy orders of both, MTO and FTO, while contributing to a reduction of the semi-finished products inventory levels required to achieve a given fill rate. The study is a contribution toward the alignment of workload control theory to industrial practice.