Production risk management system with demand probability distribution

Abstract

As market globalization has changed the nature of their business, the types of products are multiplied by customizing in order to seize each market segment. Moreover, model lifecycle have been shortened by releasing new models for stimulating customers. That makes it difficult to control the proper timing and volume of the product supply. Manufactures face the overstock risks and stock shortage risks. Each product needs its customized supply control to keep profitability. This study proposes a reproduction decision support system that measures demand risks through a sales forecasting method. This system gives manufactures the proper volume and timing guidance for daily reproduction of products. The system is applied to the case of a Japanese publisher. A three-month operational test of the system proved it able to provide the optimized supply volume options based on manufacturer's decision strategies. The ratio of surplus stock decreased from 40% to 34% as a result. (C) 2011 Elsevier Ltd. All rights reserved.