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Abstract
The underlying research discussed in this paper is derived from a research programme along three tiers of an
automotive steel supply network. The main objective of the initial research was to pinpoint wasteful activities in the
supply chain, and in later stages, to develop solutions. The preliminary work involved mapping the dynamics of the
supply chain focusing on how the demand information is passed from the "nal customer back to the material suppliers.
Production scheduling approaches were found to be a main cause of distortion in the dynamics of supply chain, and the
initial studies led to proposals for scheduling improvements both within and between companies. These proposals
include changing the scheduling frequency in accordance to the speci"c demand patterns } coupled with the use of
kanban, changeover reduction, and total preventive maintenance. Speci"cally, the scheduling of batch operations in "rst
and second tier suppliers of the supply chain was identi"ed as a key problem area in further supply chain dynamics
analysis. Therefore, a new and holistic scheduling algorithm was developed, which will be presented and discussed in
theory and application. 2001 Elsevier Science B.V. All rights reserved.
Keywords: Batch sizing; Lean manufacturing; Production scheduling
0925-5273/01/$ - see front matter 2001 Elsevier Science B.V. All rights reserved.
PII: S 0 9 2 5 - 5 2 7 3 ( 0 1 ) 0 0 0 9 1 - 3
42
The research methodology and the mapping results have been reported, therefore will not be presented here ([2}5], respectively).
In summary, the performance of the supply
chain tends to be erratic due to the following root
causes [4]:
Demand distortion. Unstable and distorted demand
patterns, causing the &Forrester' or &Bullwhip' e!ect
[6,7], whereby orders are being ampli"ed through
the supply chain. Relatively small changes in demand lead the supply chain schedulers, who work
independently from one another, to make compensating decisions on inventory and batch sizing.
Batching. Both the "rst tier assemblers and the
steel service centres have changeover operation
times which are not insigni"cant, typically in the
range 30 minutes}1 hour. Batching of production
lots hence is inevitable, being a further source of
ampli"cation. This e!ect was initially described by
John Burbidge and became known in his &multiPhasing' or &Burbidge e!ect' [8].
Process instability within the supply chain. Several
press operations work to near maximum tonnage,
sometimes with dies that are temperamental and
di$cult to set. There is then an almost irresistible
temptation to overproduce: &If it is going well, keep
it going'. Both changeover and process instability
are being actively worked on in most companies,
but both e!ects are likely to remain troublesome
factors in scheduling for a number of years to come.
Steel mill delivery performance. The steel mill
shows a low degree of delivery performance and
reliability. The consequence of supply uncertainty
Across the steel components supply chain, a variety of di!erent manufacturing planning and control approaches are applied. The steel mill for
example uses several self-developed multi-stage
scheduling systems for the production of steel coils;
the scheduling problem involves the sequencing of
slabs in the hot mill, which must conform to a &cof"n' shape in terms of width and thickness and are
run in &campaigns'. There are uncertainties with
regard to yield and quality, and coils have to be
produced in "nite sizes not necessarily conforming
to customer order multiples. Slabs are converted
into coil which are sent on to skin pass and/or
pickling, which in many cases represent localised
capacity constraints. Bu!er stock, often in considerable quantities, is held between each stage and
in dispatch, but nevertheless, delivery shortages occur regularly, thereby encouraging customers to
in#ate their lead times. Coil is transported by truck
or train, which forms a scheduling problem in itself.
At Steel Service Centre level companies use
spreadsheet based scheduling systems for inventory
control and for the production of blanks from steel
coil. The scheduling systems also deal with determining the schedule of the coil slitting and the
blanking operations.
The "rst tier suppliers convert coil or blanks into
component parts, usually involving the stages of
blanking, pressing, welding and assembly, paint,
and dispatch. There are three types of scheduling
systems in use. One group uses classic MRPII,
driving the process through a master scheduling
(MPS) and capacity management (CRP) system.
These users load the MPS according to customer
orders and communicate the resulting material requirements directly to the service centres. Although
43
44
45
46
costs of carrying inventory. Changeover time reduction is fostered by the simple logic that shorter
changeovers can be scheduled more frequently
within a constrained overall available changeover
time.
Within a given planning period the average inventory in terms of capital employed for item j is
(1)
D
(2)
Q " H.
H N
H
The number of changeovers is a function of the
total amount of time spent on changeovers for the
respective item j:
S
N" H ,
(3)
s
H
where S
is the total time spent on changeovers
H
for item j.
Therefore,
1
s
I " ; H ;D ;C .
H
H
H 2 S
H
This can also be expressed as
s
1
(4)
0I " ; H ;< ,
H
H 2 S
H
where < is the demand value for item j; de"ned as
H
the product of demand in units and cost per unit for
item j.
The total inventory is
I
1
s
" H ;<
H
2 S
H H
1 s
s
;< # ;<
"
S
2 S
(7)
and
I " Q ;C .
H
H H
The batch quantity or batch size is
(5)
and
A* S
,
(6)
H
H
where A is the total available time to perform
changeover actions.
To start "nding the optimal solution, the number
of items (k) will be limited to two (k"2). Assuming
A*S
#S
.
All available changeover time should be used,
therefore
A"S
#S
or
S
"A!S
,
s
1 s
;< #
;< .
(8)
I "
A!S
2 S
As A, s , s , < and < are given parameters the
function for calculating I
has now only one
variable: S
.
The lowest total inventory will occur when
dI
"0.
(9)
dS
De"ning the optimal solution for S
simply
as S, that is
dI
s
s
0" "! ;< #
;< .
A!2AS#S
S
dS
(10)
Eq. (11) has two solutions, which will be denominated as S and S .
These are
A
S "
.
1#((s ;< /s ;< )
and
(11a)
A
S "
.
(11b)
1!((s ;< /s ;< )
It can be proven that the second solution (13b)
always results in unfeasible numbers. Thus, the
amount of time, which has to be spent on
(13)
(s ;< "(s ;D ;C ,
H
H
H
H
H
where s is the length of time to perform one
H
changeover for item j, D the demand in units for
H
item j (per considered scheduling period), and
C the cost or value per unit for item j.
H
Although Eq. (12) has been deducted from the
simpli"ed two-item problem, it can be expressed for
any number of di!erent items [18]:
(s ;<
RPF
H .
H
H "A;
S "A;
H
(s ;<
RPF
H
H
H
H
H
The resulting optimal batch sizes are
s
Q"D ; H
H
H S
H
or
(14)
(15)
RPF
H
s
Q"D ; H ; H
.
(16)
H
H A
RPF
H
Therefore, the optimal batch sizes are a function
of all changeover times, all demand volumes, all
costs per unit, and the total available changeover
time.
47
31,38%
3.009
1.009
1.505
1.471
287
201
292
C7.774
34,87%
3920
34,61%
3900
5
5
10
10
20
20
40
8
8
4
4
2
2
1
3920
3920
value of inventory:
SB-F27
48.154
RB-F13
16.142
RSLF10
12.038
RSLF11
11.765
RB-F16
1.149
FBDRF06
804
FBD-F03
584
Totals:
C90.636
Total setup times [min]:
Reduction of the average
140
115
145
140
140
140
160
2596,44
1362,49
1321,20
1283,38
401,09
335,58
305,72
7605,90
4,0
4,0
4,0
4,0
4,0
4,0
4,0
6.019
2.018
1.505
1.471
144
101
73
C11.330
9,6
6,1
4,7
4,7
1,5
1,2
1,0
2.519
1.322
1.282
1.245
389
325
297
C7.379
10
6
5
4
2
1
1
2.408
1.345
1.204
1.471
0.287
0.402
0.292
C7.409
Batch
size
[days cov.]
No. of
setups
Average
value of
inventory
No. of
setups
Average
value of
inventory
Demand
value
[C]
Setup
time
[min]
RPF
Average
value of
inventory
No. of
setups
No. of
setups
Part-No.
Table 1
Previous and revised schedules including projected inventory reductions
Average
value of
inventory
48
6. Conclusion
In conclusion, preliminary research on the
dynamics of the information and material in the
automotive supply chain studied revealed several
types of distortion on both intra- and inter-company levels. Batch sizing in changeover constraint
operations was identi"ed as one source of distortion in supply chains, which was discussed in this
paper. The problem was addressed by developing
a new algorithm, as existing approaches were found
not to provide appropriate solutions.
The press shop scheduling problem has two important issues: batch sizing and sequencing, with
this research primarily focusing on de"ning &good'
batch sizing decisions. The improvement potential
of proper batch sizing techniques is signi"cant and
should alert every company operating in a repetitive batch production environment. The model has
been developed to minimise inventory levels under
constrained total capacity, whilst considering product-individual changeover times. The advantages of
a total target changeover time were identi"ed.
In general, applying the algorithm results in inventory savings of more than 10% without changeover time reduction, but the potential is far higher.
A study comprising four di!erent press shops with
over 40 presses in total showed a range of potential
savings between 4% and 35%, with an average
potential saving that has been well above 10% in
each of the surveyed companies. In those cases (i.e.
single presses) where relatively small improvements
could be realised, the processed items showed very
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