A dissertation submitted in partial fulfilment of the requirement for the degree of Doctor of Engineering, School of Advanced Technologies

Thesis (Ph.D.) - Asian Institute of Technology,2001

Product variety has been an effective weapon for competition in the past two decades. High customer expectation together with rapid technology changes and increased globalization can be named as some common forces behind product variety. Although product variety helps stimulate sales, it may lead to negative consequences including inventory imbalance, manufacturing complexity and high production and distribution costs if not well managed. To deal with the unfavorable aspects of product proliferation, some strategies have been proposed and introduced in industries. One promising approach is to redesign the product or the process through which a product is manufactured and distributed in order to gain control of inventory and customer satisfaction for the product. While some strategies like Just-inTime (JIT) and Flexible Manufacturing Systems (FMS) have been discussed extensively in technical literature, others like Postponement and Commonality, Mass Customization, Quick Response (QR), have elicited research interest only recently. This dissertation addresses Postponement and Commonality, two faces of an approach called redesign for product variety. Component Commonality refers to the use of the same component in various products. Postponement of product differentiation point refers to the delay in time a product has its unique features. The former emphasizes on the product structure whereas the latter emphasizes on the manufacturing process. They are closely related and both aim at reducing work-in-process (WIP) and invento1y cost while maintaining high level of product variety and customer satisfaction. The first part of the dissertation studies the effects of Component Commonality in various inventory systems with multiple products and components. Important results include a method to formulate a general model with commonality and the proof of duality between two classes of models. Closed form solution was obtained for a certain number of products, while simple formulation was developed for problems with large number of products. At the same level of customer service, component commonality is seen reducing total inventory of the system. The effects of commonality and increasing commonality were quantified and thoroughly analyzed. In the second part, the research measures the role of Postponement in production, using analytical and simulation tools. Analytical methods were applied for a stationary production system to point out the cost savings when postponement of time or of the added value occurs. Queueing networks were used to study the dynamic behavior of postponement in the two production systems: process layout and product layout. It shows that postponement greatly reduces both manufacturing leadtime and WIP. The effects of postponement under different production control policies, namely push, pull and hybrid of push-pull, were studied using simulation. Pull systems were shown to be more sensitive to the impact of postponement, in terms of leadtime and inventory cost, than the con-esponding push system. iii