Background and Setting

PVC resin is heated and continuously extruded through dies to manufacture PVC pipe. The structure of the extrusion dies, the thickness of the PVC pipe wall and the composition of the resins used to make the pipes help establish “group technologies” (i.e. sets of products which can be efficiently produced in sequence between die changes).
In general, extruders either make small diameters or large diameter pipes. Each extruder has a range of diameters it can produce with various efficiencies.
Production is primarily to inventory but occasionally to order.

Client Business Objectives

  • Remove the bottleneck of production which forces some extruders to be overloaded while others are idle.
  • Determine Economic Production Quantities (EPQ’s) to balance production efficiencies with the cost of holding inventories.
  • Determine inventory safety stock levels to provide required service levels.

How did We Help?

An Inventory/scheduling system was developed to:

  • Optimally select the extruders required to meet the current demand.
  • Use idle extruders to build inventory if such an opportunity exists.

The system includes the following modules:

  • A product stratification program which classifies the product line into 3 sales volume categories (i.e. an ABC classification).
  • An allocation program which determines the optimal inventory levels, given seasonal conditions and service policies as determined by the ABC classification.
  • A production planning system which assigns each group technology to one or several extruders to maximize throughput.

How the Client Benefited

  • Reduction of inventory levels.
  • Determination of new inventory safety stocks and stocking policies.
  • Pricing based on costs, e.g. a made to order C product sells at a premium.
  • More even load balancing on the extrusion lines.
  • Improved customer service levels.

This system has only been recently implemented in one plant and actual benefits are not yet measurable.