MTO/MTS policy optimization for sheet metal plate parts in an ATO environment

The management of the production and procurement of the assembled parts in an assembly to order (ATO) environment is a challenging problem. Due to the high variety and high inventory space utilization of the sheet metal plate parts, many companies choose to include in their production the cutting, blending, welding and if necessary, painting processes, reducing the lead time and consequently the stocks levels. The related trade-off between the setup times and the inventory space utilization is clear. This paper aims to propose a bi-objective optimization model to properly set the MTO/MTS policy to adopt. A case study is reported to test the model and to demonstrate the practical implication of this research.