IN-PLANT MATERIAL BUFFER SIZES FOR PULL SYSTEM AND LEVEL-MATERIAL-SHIPPING ENVIRONMENTS IN THE AUTOMOTIVE INDUSTRY

Traditionally automotive assembly plants operate with at least two wee ks of frozen vehicle orders enabling them to calculate the amount of m aterial needed for the next two weeks. Implementing a pull system betw een the plant and its customers, and level-material-shipping between t he plant and its suppliers, changes the amount of material buffer need ed within the assembly plant. The pull system eliminates the frozen ve hicle-order schedule, without which plants cannot calculate the materi al needed, but must use inventory to buffer the line from random deman d. Level-material-shipping, a just-in-time principle that provides sup pliers with a constant shipping schedule, forces plants to use materia l inventory to buffer the line from un-level demand for parts resultin g from un-level production or an un-level model mix. We model these ef fects to derive formulas for the buffer needed to provide a given serv ice level in the face of demand variability, un-level production, and un-level model-mix.