A technique for uncertainty reduction based on order commonality

The use of commonality is widely diffused as a criterion to reduce uncertainty in demand forecasts for the master production schedule (MPS). Nevertheless, studies have mostly focused on exploiting component commonality in make to stock and assemble to order manufacturing. This paper refers to planning environments with two specific characteristics. First, the degree of certainty of the demand is extremely low, due to product complexity, with poor modularization and standardization, and to the presence of few customers of large dimensions. Second, the delivery lead time is less than the total lead time. In this situation, demand for MPS planning units is extremely uncertain and sporadic. It is therefore necessary to formulate in advance forecasts of customer orders with a redundant configuration. In this paper a technique for the reduction of demand uncertainty is introduced, based on the exploitation of order commonalities. In particular, relations between order commonality and uncertainty reduction in a planning environment with such complex features are illustrated. Then, guidelines for the implementation of the technique in order to reduce over-planning in the master production schedule are provided. Finally, the performances of the technique are empirically analysed by means of both a simulation model and experimental application in a telecommunication systems manufacturer