Using hierarchical pseudo bills of material for customer order acceptance and optimal material replenishment in assemble to order manufacturing of non-modular products

• Published in: International journal of production economics 2000-06, Vol.66 (2), p.171-184
• Main Authors: Bertrand, J.W.M., Zuijderwijk, M., Hegge, H.M.H.
• Format: Article
• Language: English
• Subjects: Assemble-to order manufacturing; Hierarchical pseudoitem bill of material; Inventory control; Manufacturing; Production scheduling; Studies
• ISSN: 0925-5273; 1873-7579
• DOI: 10.1016/S0925-5273(99)00121-8

In assemble-to-order manufacturing, often product families with many options and features are offered to the market. Demand for an individual option or feature can be quite low and uncertain. The efficient checking of materials availability during customer order acceptance, and the materials requirement planning are crucial for effective control in this type of industry. Traditionally, modular bills of materials are used for this purpose. If interdependencies exist between features and options in the product family, modular bills are inadequate; instead generic bills of material can be used to model the production options available in a product family. In this paper we develop a variant of the modular bill of material, called the hierarchical pseudoitem Bill of Material, which is the mirror image of the choice tree in the generic bill of materials, and which can be used for checking materials availability, for allocating materials to customer orders, and for materials replenishment. Furthermore, we propose a model to optimize the master production schedule levels for options and features that drive the material replenishments process. The optimization aims at balancing the stock keeping costs of specific parts for options, with the revenues that result from selling products variants with those options.