The Client?s Component Rebuild Centre (CRC) is a key division through which The Client provides its customers with value. Customers benefit through both reduced new equipment costs (through credits), and the ability to access quality replacement parts at a low cost. Although the CRC adds value to The Client, it has several operational issues that reduce its profitability. High inventory costs, as well as erratic employee utilization rates and a lack of demand forecasting hamper the productivity of the facility.
In an attempt to address some of these issues, The Client?s CRC Management Team enlisted the assistance of CriticalPath Consulting to resolve some of the problems that they faced. The main problems addressed by the team were:
- Workload smoothing
- Reduction of inventory levels
- The prioritization and planning of product production
- The determination of optimal inventory levels (dependant upon pre-selected service rates).
This paper describes the Decision Support Tool that Critical Path developed to assist the management team in addressing these issues. The tool uses simulation to determine optimal inventory levels, and then a incremental dispatch heuristic allocates production based on service levels.
The tool has already had a positive impact- it is helping the CRC lower holding costs through reducing production, and it is reducing labour cost by creating smooth production schedules.