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Merging make-to-stock/make-to-order decisions into sales and operations planning: A multi-objective approach

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  • Pereira, Daniel Filipe
  • Oliveira, José Fernando
  • Carravilla, Maria Antónia

Abstract

With the advent of mass customization and product proliferation, the appearance of hybrid Make-to-Stock(MTS)/Make-to-Order(MTO) policies arise as a strategy to cope with high product variety maintaining satisfactory lead times. In companies operating under this reality, Sales and Operations Planning (S&OP) practices must be adapted accordingly during the coordinated planning of procurement, production, logistics, and sales activities. This paper proposes a novel S&OP decision-making framework for a flow shop/batch company that produces standard products under an MTS strategy and customized products under an MTO strategy. First, a multi-objective mixed-integer programming model is formulated to characterize the problem. Then, a matrix containing the different strategies a firm in this context may adopt is proposed. This rationale provides a business-oriented approach towards the analysis of different plans and helps to frame the different Pareto-optimal solutions given the priority on MTS or MTO segments and the management positioning regarding cost minimization or service level orientation. The research is based on a real case faced by an electric cable manufacturer. The computational experiments demonstrate the applicability of the proposed methodology. Our approach brings a practical, supply chain-oriented, and mid-term perspective on the study of operations planning policies in MTS/MTO contexts.

Suggested Citation

  • Pereira, Daniel Filipe & Oliveira, José Fernando & Carravilla, Maria Antónia, 2022. "Merging make-to-stock/make-to-order decisions into sales and operations planning: A multi-objective approach," Omega, Elsevier, vol. 107(C).
    • Handle: RePEc:eee:jomega:v:107:y:2022:i:c:s0305048321001705
    DOI: 10.1016/j.omega.2021.102561
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    Cited by:

    1. Lin, Ran & Wang, Jun-Qiang & Oulamara, Ammar, 2023. "Online scheduling on parallel-batch machines with periodic availability constraints and job delivery," Omega, Elsevier, vol. 116(C).
    2. Baek, Jung Woo & Bae, Yun Han, 2022. "A queuing-inventory model for manufacturing systems with fluid-type inventory," Omega, Elsevier, vol. 111(C).
    3. Pereira, Daniel Filipe & Oliveira, José Fernando & Carravilla, Maria Antónia, 2023. "Design of a sales plan in a hybrid contractual and non-contractual context in a setting of limited capacity: A robust approach," International Journal of Production Economics, Elsevier, vol. 260(C).
    4. Sato, Yutaro & Maeda, Hiroyuki & Toshima, Ryusei & Nagasawa, Keisuke & Morikawa, Katsumi & Takahashi, Katsuhiko, 2023. "Switching decisions in a hybrid MTS/MTO production system comprising multiple machines considering setup," International Journal of Production Economics, Elsevier, vol. 263(C).
    5. Cao, Kaiying & Xu, Yuqiu & Hua, Ye & Choi, Tsan-Ming, 2023. "Supplier or co-optor: Optimal channel and logistics selection problems on retail platforms," European Journal of Operational Research, Elsevier, vol. 311(3), pages 971-988.
    6. Zhai, Yue & Hua, Guowei & Cheng, Meng & Cheng, T.C.E., 2023. "Production lead-time hedging and order allocation in an MTO supply chain," European Journal of Operational Research, Elsevier, vol. 311(3), pages 887-905.

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