Make-to-stock or make-to-order scheduling based on incremental cost resource smoothing heuristic algorithm for single product lot sizing
Production planning plays an important role for the enterprise success. The best production planning helps the company better use the resources, materials and inventories to minimize the total costs of production, setup, holding, lost customer, and other related costs. Practically, if the demand is smooth, one-piece flow would be the best production method. Conversely, if the demand is volatile or obviously seasonal, it is hard to maintain a one-piece flow. Therefore, the purpose of this research is to develop a model that minimizes total cost, considering production, setup, holding, and lost customers, with capacitated and limited inventory constraints and deterministic demand. The proposed approach integrates Wagner - Within method, Incremental Cost heuristic, and Incremental Cost Resource Smoothing heuristic with its improvement. Hence, the procedure is built up to support decision on when the production line should be configured as Make-to-Stock (MTS) or Make-to-Order (MTO) in order to minimize the total costs.