Integration of assembly and fabrication for make-to-order production

The problem of make-to-order production is as follows. A number of customer -specific orders have to be assembled in a multi-project type environment. Each order is made of different assembly jobs which are interrelated by pre cedence constraints. To be processed, an assembly job requires in-house fab ricated and out-house procured parts as well as capacity of assembly resour ces (assembly workers, power tools). Different customer orders need the sam e part types and hence the fabrication of parts has to take into account lo t sizing decisions. The overall problem is how to coordinate fabrication an d assembly with respect to scarce capacities in the assembly and the fabric ation such that the holding- and setup-cost of the entire supply chain - fa brication-assembly - are minimized. This problem has not been treated in th e literature so far. Hence, we give a mixed-integer programming model for t he problem and discuss its properties. Afterwards, we propose a simple, two -level backward oriented heuristic and evaluate it on a set of benchmark in stances. (C) 2000 Elsevier Science B.V. All rights reserved.