Tuesday, September 18, 2012

A fly in the ointment-TOC supply chain replenishment system

The Theory of Constraints(TOC) has been implemented by many companies including GM, P&G, AT&T, etc. And it has also been used for the improvement of the bullwhip effect in their supply chains. However the TOC method is not flawless when apply in a plant or a central warehouse.

This article finds out a problem when using the TOC supply chain replenishment system(TOC-SCRS), there will be some conflicts between the determination of RRT(replenishment frequency and replenishment lead time) and the replenishment quantity. As shown in Fig.3 , Generally, the replenishment frequency of a node depends on the public transportation schedule such as ship schedules etc. or its private conveyor schedule. [1]And the replenishment lead time is the required transportation time from upstream node to this node. [1]

The reason why conflicts would happen between the determination of RRT and the replenishment quantity is because the replenishment frequency depends on the set up frequency in the plant and the replenishment lead time depends on the production lead time.[1]
However, the set up frequency and the replenishment lead time in the plant depend on the production quantity (i.e., replenishment quantity). [1]It means that the replenishment frequency and the replenishment lead time must depend on the known replenishment quantity, especially under the constraint of limited plant capacity. [1]However, in TOC-SCRS, the replenishment quantity is determined by the known parameters of the replenishment frequency and the replenishment lead time. [1]

The article also provides a solution for enhance the disadvantage of TOC in a plant or center warehouse. My question is under which conditions, the TOC can generate best functions?  

[1]HH Wu. A study of an enhanced simulation model for TOC supply chain replenishment system under capacity constraint. Volume 37, Issue 9, September 2010, Pages 64356440
[2] A Guide to Implementing the Theory of Constraints (TOC).

1 comment:

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