Investigating the collective impact of postponement, scrap, and external suppliers on multiproduct replenishing decision

Abstract

This study examines the collective impact of postponement, scrap, and subcontracting standard components on the multiproduct replenishing decisions. Rapid response, desirable quality, and various goods guide the client’s demands in today’s competitive market. Therefore, many manufacturing firms search for alternative fabrication and outsourcing strategies during the production planning stage to satisfy the client’s expectations, minimize fabrication-inventory costs, and smoothen machine utilization. To effectively help producers meet today's client's needs and enhance their competitive advantage, we develop a two-stage multiproduct replenishing system incorporating scraps, standard parts subcontracting, commonality, and delayed differentiation. To reduce the production uptime, stage one has a hybrid fabrication process for the common components (i.e., a partial outsourcing strategy), and stage two manufactures the finished multiproduct. In-house fabrication processes in both stages are imperfect; a screening process detects and removes scraps to maintain the finished batch quality. We determine the cost-minimized operating cycle. The findings reveal the collective impact of postponement, scrap, and external suppliers on this multi-product replenishment problem and can be used to facilitate production planning and decision-making.