International Journal of Computer Science Issues

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The key for enterprises to implement the postponement strategy is the right decision on the location of Customer Order Decoupling Point (CODP) so as to achieve the scope economics of mass customization and scale economics of mass production fully. To deal with production cost optimization problem of postponement system based on various situation of CODP, a basic model of production cost and its M/M/1 extended model are proposed and compared so as to optimize the overall production cost of the postponement system. The production modes can be classified as MTS (make to stock), ATO (assemble to order), MTO (make to order) and ETO (engineering to order) according to the inventory location, and the postponed production system considered here includes manufacturing cost, semi-finished inventory cost and customer waiting cost caused by delaying delivery. By Matlab simulation, we can compute the optimal location of CODP in each production mode, which can provide some management insight for the manufacturer to decide the right production mode and utilize the resources efficiently.