Optimising a Horizontally Integrated Push/Pull Hybrid Production System in a Foundry

Abstract

This study investigates a horizontally integrated push/pull hybrid production system (HIHPS) of a large foundry in the Asia-Pacific region. Components are produced according to a pushing philosophy and are stored in a buffer when complete. Assembled goods draw components from the buffer and are made to order. The objective is to minimise the sum of ordering, inventory and tardiness costs. Currently, the inventory decisions are made based on the experience of personnel within the foundry. Operations research provides an opportunity to improve efficiency by using computational techniques to determine good inventory decisions. Traditional inventory and lot-sizing problems determine optimal policies using mathematical analysis made possible by simplifying assumptions. These assumptions are invalid for the HIHPS problem studied in this paper so that mathematical analysis is extremely difficult if not impossible. As an alternative, simulation is combined with simulated annealing to determine a good inventory policy. Experimental results are used to evaluate the performance of this approach and to identify strategies for developing even better techniques.