IOBPCS based models and the customer order decoupling point

Abstract

The inventory and order based production control system (IOBPCS) is mainly a model of a forecast driven production system where the production decision is based on the forecast in combination with the deviation between target inventory and actual inventory. The model has been extended in various directions by including e.g. WIP feedback but also by interpreting the inventory as an order book and hence representing a customer order driven system. In practice a system usually consists of one forecast driven subsystem in tandem with a customer order driven subsystem and the interface between the two subsystems is represented by information flows and a stock point referred to as the customer order decoupling point (CODP). The CODP may be positioned late, as in make to stock systems, or early, as in make to order systems, but in any case the model should be able to capture the properties of both subsystems in combination. A challenge in separating forecast driven from customer order driven is that neither one of inventory or order book should be allowed to take on negative values, and hence nonlinearities are introduced making the model more difficult to solve analytically unless the model is first linearized. In summary the model presented here is based on two derivatives of IOBPCS that are in tandem and interfaces related to where the demand information flow is decoupled and the positioning of the CODP.