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Application of the ELSP to the tobacco industry

Muller, W.M.L. (2011) Application of the ELSP to the tobacco industry. Master's Thesis / Essay, Industrial Engineering and Management.

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Abstract

The supply managers of BAT Niemeyer would like to produce with fixed production cycles, such that products are produced within a fixed sequence on machines. These fixed sequences have to be such, that the total holding and setup costs incurred by BAT in the process of delivering fine cut tobacco products to their end markets, are minimized. The scheduling problem was associated with the Economic Lot Scheduling Problem (ELSP), since there are multiple items which are competing for the same machine capacity, and the goal is to minimize the total holding and setup costs. The ELSP is one of the most difficult lot-sizing problems, which is known to be NPhard. The problem turned out to be even more complex due to characteristics of the system under research. These scheduling characteristics are (a) tax banderoles of the Netherlands and Germany which need to be prepaid, (b) sequence-dependent setups and costs, (c) partly identical machines, (d) shared resources, and (e) different capacity groups. It is concluded that BAT Niemeyer is confronted with a variant of the basic ELSP treated in literature. In literature no algorithm could be identified which deals with the specific combination of characteristics found at BAT Niemeyer. In consultation with the problem owners certain scheduling characteristics were relaxed to reduce the complexity of the problem. By taking into account the identified requirements of the stakeholders during the entire research, a design solution is generated that meets the requirements of the stakeholders. First the performance indicators are identified, such that the quality of a production schedule can be assessed. Thereafter, a simulation tool is written which can assess the feasibility of a schedule. The tool also provides the performance indicators which were identified in the previous step. Finally, a hierarchical procedure is developed to help the user with coming efficiently to an improved and desirable production schedule. BAT Niemeyer is taking steps to implement the procedure described in this thesis. After implementation BAT is expected to experience several benefits. In 2010 the average inventory of prepaid tax banderoles at the end of the month was approximately €10 million. After implementation almost all this working capital is released. Also the average inventory of finished goods will be reduced, since uncertainty related to cycle time decreases.

Item Type: Thesis (Master's Thesis / Essay)
Degree programme: Industrial Engineering and Management
Thesis type: Master's Thesis / Essay
Language: English
Date Deposited: 15 Feb 2018 07:46
Last Modified: 15 Feb 2018 07:46
URI: http://fse.studenttheses.ub.rug.nl/id/eprint/9801

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