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Optimized production and inventory decisions for a mixed maketo-

order/make-to-stock ready-made garment manufacturer
Aya M. El-Mehany Youssef

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Youssef, A. (2018).Optimized production and inventory decisions for a mixed make-to-order/make-tostock
ready-made garment manufacturer [Master’s thesis, the American University in Cairo]. AUC Knowledge
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Youssef, Aya M. El-Mehany. Optimized production and inventory decisions for a mixed make-to-order/ make-to-
stock ready-made garment manufacturer. 2018. American University in Cairo, Master's thesis.
AUC Knowledge Fountain. https://fount.aucegypt.edu/etds/192

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 The American University in Cairo
SCHOOL OF SCIENCES AND ENGINEERING

Optimized production and inventory decisions for a mixed make-to-

order/maketo-stock ready-made garment manufacturer By

Aya M. El-Mehany Youssef

A thesis submitted in partial fulfillment of the requirements for the degree

of
Masters of Science in Mechanical Engineering with
specialization in Industrial Engineering

Under the supervision of

Dr. Tamer F. Abdelmaguid

Visiting Associate Professor of Industrial Engineering

Mechanical Engineering Department, American University in Cairo

School of Sciences & Engineering

Winter 2018
 Approvals

Student Full Name: Aya .M. ElMehany Youssef Korayem

Student ID: 8000 70 817

Thesis Title: Optimized production and inventory decisions for a mixed make-
toorder/make-to-stock ready-made garment manufacturer

This thesis has been successfully defended.

Thesis Supervisor:
Name: _________________________________________
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Institution: _________________________________________
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i
 ACKNOWLEDGMENTS
Dedicated to my loving and supporting family, wonderful mother, amazing brother
Ahmed and caring uncle Lotfi.
To my father, I wished you were here, I kept the promise and I did it. I am proud that I’m
part of you. My blessed soul father; sheikh Muhammed Muhanna; God gift to me.
My precious friends whom were always beside me, they have always believed in me and
never failed to give me their support; Nesma Abuelkheir, Yosra Zakaria, Hala Salem,
Marwa rashwan, Sara Abdelrazek, Basma Bargal, and Radwa raafat. With my deepest
love and respect, I’d like to acknowledge respectful professors; Dr. Maher Younan, Dr.
Amal Elesawi and Dr. Mustafa Arafa for their generous support and tolerance.
I am particularly grateful for the assistance given by my supportive adviser Dr. Tamer
Abdelmeguid, your support was invaluable.
The gem in the crown Prof. Amr Eltawil, I owe you my deepest gratitude. I can’t find
words to express my gratitude for your meticulous comments, witted advises, continuous
support I’m leaving it to God, rewarding you on his expanse capabilities not my expanse.

II
 ABSTRACT
The American University in Cairo
Optimized production and inventory decisions for a mixed make-to-
order/make-to-stock ready-made garment manufacturer Aya M.
Elmehany Youssef
Supervisor: Dr. Tamer F. Abdelmaguid

In this thesis, a production and inventory planning model for mixed make-to-order
(MTO) make-to-stock (MTS) production system in garment industry. Where the
dominant production is typically for the Make-to-order production and the make-to-stock
production is penetrating the mainstream production (MTO) as a way of enhancing the
revenues and maintaining a positive cash flow, that are often degraded due to either
seasonality of demands or production planning challenges. The model considers capacity
planning for the mixed environment when there are predictable fluctuating demands. Due
to the nature of the clothing business, it is challenging for a garment manufacturer to
cope with seasonal changes while having the best capacity utilization.
The literature acknowledges production planning in the garment industry. While a little
focus was for capacity planning for seasonal fluctuating demands. Mathematical
programming for capacity planning in a mixed MTO and MTS garment-manufacturing
environment is a viable approach that can provide effective management decisions that
can help the garment industry to strive in today’s competitive pace.
The proposed model considers distributing the available capacity between MTO and
MTS production and the implications of the costs and revenues for different capacity
distribution. Decisions made on the production amounts, inventory levels and generated
revenues are attained. The model was verified and validated by applying it to a local
ready- made garment factory. The results ensured the validity of the proposed model.
When analysis was made to the parameters that influence the decisions, it was found that
distributing the capacity between MTO and MTS with different percentages had
significant impact on the revenues and costs.
The model was very sensitive to the increases in the fabric price and subcontracting costs
while the overall net profits were not significantly affected by the changes in the
inventory holding cost. Last, this work is useful in helping garment manufacturers adapt
rapidly to seasonal changes by deploying their capacity effectively in favor of their
projected seasonal plans.

III
Table of contents

Approvals .............................................................................................................................
i

Chapter 1 Introduction .......................................................................................................

1

1.1 Background ...........................................................................................................

1

1.2 Problem description .............................................................................................. 7

1.3 Thesis Outline .................................................................................................... 10

Chapter 2 Literature Review .............................................................................................

11

2.1 Production planning in the garment industry ..........................................................

11

2.2 Production Planning in MTO production systems ..................................................

13

2.3 Mixed MTO and MTS production systems............................................................. 15

2.4 Existing techniques in the literature and research gap ............................................

19

2.5 Thesis objectives .....................................................................................................

20

Chapter 3 The Proposed MTO/MTS Production Planning Model ...................................

21

3.1 Problem description .................................................................................................

21

3.2 Model Assumptions ................................................................................................

23

IV
 3.3 Model formulation .................................................................................................
24

3.3.1 Index sets .......................................................................................................... 24

3.3.2 Input parameters ............................................................................................... 25

3.3.3 Decision variables ............................................................................................. 26

3.3.4 Objective function ............................................................................................ 27

3.3.5 Constraints ........................................................................................................

28

3.4 Model Characterization ..........................................................................................

31

Chapter 4 Model verification and validation ..................................................................

35

4.1 Model verification ...................................................................................................

35

The base case .............................................................................................................

35 Case study

description ............................................................................................... 36

4.2 Model Validation .................................................................................................

42

Case 1: Limited MTO and considerable space capacity ............................................

43

Case 2: No quantity discount for fabric purchased for MTS products. .....................
44

Case 3: Case where the model chooses mainly MTO/MTS. .....................................

45

V
Chapter 5 Computational Results and Sensitivity Analysis .............................................
47

5.1 Impact of changing percent occupied by MTO and MTS on the revenues. ............
47

5.2 Impact of distributing capacity between MTO and MTS on the costs. ...................
49

5.3 Impact of changing percent of capacity between MTO and MTS on the inventory

holding costs. .................................................................................................................

50

5.4 Impact of increasing fabric price on the profits. .....................................................

51

5.5 Impact of increasing the inventory holding cost on the revenues. ..........................
52

5.6 Impact of increasing subcontracting cost on the profits. .........................................

54

Chapter 6 Conclusions and Future work ..........................................................................

56

6.1 Concluding remarks ................................................................................................

56
6.2 Insights on Future work: ......................................................................................... 58

References .........................................................................................................................
59

Appendix A: The inputs for multiples of MTO – MTS products .....................................

1

Appendix B: The outputs for multiple of multiple MTO – MTS products ........................
F

Appendix C: Fabric inventory and quantity purchased for the 32 – 64 MTO – MTS ......
12

VI
VII
List of Figures

Figure 1: Clothing growth rate ............................................................................................

1

Figure 2: Garment production processes ............................................................................

4

Figure 3: Inflation rate in egypt past 5 years ......................................................................

7

Figure 4: Egypt population .................................................................................................

9

Figure 5: Problem size vs. model characteristics ..............................................................

34

Figure 6: cash flow for base case ......................................................................................

41

Figure 7: cash flow/period for case 3 ................................................................................

46

Figure 8: Percent of capacity consumed by MTO-MTS vs. revenues ..............................

48

Figure 9: percentage of capacity consumed vs. costs .......................................................

50 Figure 10: Percentage of capacity distributed between MTO and MTS vs. inventory

holding cost .......................................................................................................................

51 Figure 11: Fabric price percentage increase vs.

revenues ................................................. 52

Figure 12: net profits vs. change in inventory holding cost ..............................................
53

Figure 13: profits vs. subcontracting cost .........................................................................

55 List of Tables

VIII
Table 3: Size of the model components ............................................................................
31

Table 4: Size of the total number of variables and constraints .........................................

32

Table 5: Problem size for different number of MTO/MTS products ................................

33

Table 6: Production capacity data for the base case .........................................................

37

Table 7: Fabrics input parameters .....................................................................................

38

Table 8: Initial inventory values and initial cash value ....................................................

38

Table 9: MTO and MTS input data ...................................................................................

38

Table 10: Base case MTO demands ..................................................................................

38

Table 11: MTS forecasted demands .................................................................................

39

Table 12: Base case optimal results ..................................................................................

39

Table 13: Base case fabric purchasing amounts and their inventory levels .....................
40

Table 14: Base case fabric inventory levels ......................................................................

40

Table 16: Production plan for MTO and MTS produced during period t ....................
41

Table 17: Cases considered for model validation .............................................................

42

Table 18: Validation - Case 1 ...........................................................................................

43

IX
Table 19: fabric order quantity (FQfkt) solution for 64,128 MTO, MTS .........................
44

Table 20: fabric order quantity (FQfkt) solution for 32, 64 MTO, MTS ...........................
45

Table 21: MTS inventory levels when eqn. (5) is relaxed. ...............................................
46

Table 23: Capacity distributed between MTO, MTS, and their projected revenues ........
47

Table 24: Production costs (EGP) vs. percentage of capacity ..........................................

49 Table 25: Percentage of capacity distributed between MTO and MTS vs. Inv. holding

cost ....................................................................................................................................
50 Table 26: Fabric price percentage increase vs. profits and fabric inventory
cost ............. 51

Table 27: Revenues and costs for inventory holding cost increase ..................................
53

Table 28: Revenues and costs vs. subcontracting cost percentage increase .....................
54

X
 X

Chapter 1 Introduction

1.1 Background

The readymade garment industry is considered as a one of the very competitive industries

in the world, Guo, et.al (2006). Its supply chain is dynamic and complex due to the

disparity along the chain. Garment manufacturing is a substantial sector within the textile

supply chain. Apparel industry has two sides of productions. One is the artistic part (high

fashion industry) which is highly perishable and subjected to seasonality. The other is the

ready-made garments, which is a very competitive market. Clothing is very profitable

especially if it is well planned for.

Figure 1: Clothing growth rate

Appendix - A
Planning of the ready-made garment production involves many considerations such as

timings of the fabrics supply and designing efficient production schedules that meet

promised delivery dates. The ability to control the inputs and outputs of the apparel

production process is a very challenging production management task, especially when

there is variability in the demand types; whether it’s made to order or made to stock; and

amounts. The garment manufacturing is considered labor intensive due to the large

number of manual operations.

Garments produced to fashion are subjected to high variety of taste, which implies more

frequent garments to be available in stock prior to season and preferably an end of season

clearance. Seasonality of the garment industry enforces having shorter-term production

plans that tackles prominent production decisions, which is quite challenging to a

management team. Managerial decisions must be expeditious in response to the

accelerated market.

Often there are products produced to order and garments produced to stock. An effective

management of both types of production types within limited resources of a garment

factory is very crucial. Production managers are striving to meet orders due dates and at

the same time achieve their production plan targets for selected seasonal products, that

enable their firm to cope with the fierce competitive market.

Production of garment undergoes a series of processes. Figure 2 shows that the input to

the process is the fabric and the output is the desired garment product. In many cases both

types of production systems are tied up to the same process. The typical bottleneck in a
garment production process is the sewing stage/ stitching. As it is considered the longest

processing stage among garment-manufacturing stages, and that is why the industry is

characterized by being labor intensive. Shorter time on the sewing requires highly skilled

workers and therefore very high costs. It also needs attention to the quality of the stitched

piece of garment before proceeding to the next operational stage, due to the difficulty of

repairing any uncovered defects after an item being sewed. However, workers operating

at the cutting stage are the most expensive. Typically, the minimum batch size of a

garment ranges from 50 to 100 units.

sampling for order

set of recieved set of
placement for
orders acceptable accepted planned to
(MTO/MTS ) orders orders produce orders

production
cutting spreading marker making
pattern

sorting and pre-sewing inspection

sewing
bundling operations point

button and
packing / final button
dispatching inspection finishing
hole

Delivery
/warehouse

2
 Figure 2: Garment production processes

• Design/ Sketch

The design or the sketch of the garment is the primary step in garment manufacturing.

The sketch includes the features of the pattern to be produced.

• Pattern Design

Each component of the garment has its own pattern. That pattern is sketched on a hard

paper with the exact dimensions. Seam allowance, trimming allowance, ease allowance,

pleats and any special designs are all included in the pattern dimensions.

• Sample Making

The pattern is placed over the fabric, which is cut into the pattern form, and then the

garment is sewed and assembled.

• Production Pattern

After the customer approves the sample pattern, production of the pattern starts.

Sometimes different patterns that include any modifications required or suggested by the

customer are produced.

• Marker Making

All required sizes of the same model and same fabric are detailed into its pattern design.

Pattern details mean arranging pieces of the same garment in a way so as to minimize the

fabric consumption and waste.

3
 • Spreading

It is the process prior to fabric cutting directly where the fabrics desired to be cut is

placed over each other in layers. The height of all the whole layers should not exceed the

cutting scissor knife length.

• Fabric Cutting

The marker paper of the desired pattern is pinned over the fabric layer as accurately as

possible. The straight knife cutting scissor is then used to cut out the fabric into the

required garment pieces. This part of the process needs highly skilled labors for its

accuracy.

• Sorting/ Bundling

Every component of the garment is sorted together in stack form according to their color

and size of their respective style.

• sewing (garments assembly)

Sewing is the process of assembling garment components using different types of sewing

with different rates.

• Inspection

At the inspection point, the sewed garments are carefully inspected to identify defects that

may have occurred in preceding stages. Some defects such as wrong measurements can

be corrected by sending it back to the respective stage. If it cannot be corrected it is

regarded as second degree garment or scrap.

• Pressing

4
In this stage, the pressing machine is used if pressing is needed for specific garments like

shirts collars and cuffs.

• Finishing

Finishing stage includes adding buttons if necessary. Afterwards each garment is

inspected to make sure there are no defects. Then it is clean then it is ironed and folded to

the required packing size.

• Final Inspection

It includes checking the fine garment details such as buttons, zippers, labeling, ironing

and cleaning.

• Packing and dispatching.

Products are packed after the final inspection. Packing may be sorted according to

colors or size and then bundled in to boxes. The packaged garments are either

placed at the warehouse or delivered to the customer.

As garment production is considered a fuzzy manufacturing environment, production and

capacity planning in such an environment is very challenging particularly for stages with

manual operations. Manufacturers are always trying to meet new trends and therefore the

planning horizon is often short.

There are important decisions that have to be taken cautiously as they have direct impact

on the costs and revenues. Decisions like determining optimal production times and

quantities to meet due dates for MTO products. Moreover, having an updated seasonal

plan for new seasonal products so as to preserve a competitive edge while at the same

time minimizing the production costs to achieve target profits.

5
1.2 Problem description

Egypt ready-made garment manufacturing is a very promising industry. However,

Figure 3: Inflation rate in egypt past 5 years

http://www.egyptindependent.com

Egyptian manufacturers were greatly affected by the economical stagnation the past few

years, as shown in the data in figure 3 according to the central bank of Egypt. Factories

that depend solely on the local market have been greatly affected from the egyptian

pound flotation, for fabric prices have notably increased. Fabrics required for large

orders, can be supplied on installments along the production plan of the order. However,

consecutive rises in the fabric prices encounter remarkable drawbacks in the cash flow

that disables a smooth production to meet up with the upstream orders. The shorter the

planning, the less risky the management will be subjected to the fluctuating fabric prices.

6
This work is motivated by the drawbacks in the net profits experienced by some of the

ready-made garment factories. Factories that were affected by several and sequential

financial strikes, resulting from continuous payment delays along with pressuring

periodical operational costs. All have led to unpredictable financial disturbances.

The main challenge would be in the complexity of managing both production types

within a short planning horizon with limited resources. Challenges like meeting orders

due date, ability to produce forecasted demand within the season and succeed in

generating a regular cash that permits smooth production flow.

Ready-made garment industry in Egypt is very promising if managed properly; the

growing size of the population is an excellent asset that entails wide and varying

marketing chances. Figure 4 shows the increasing trend of the population which

consequently means increasing market opportunities.

Figure 4: Egypt population

http://www.data360.org

7
Typically, ready-made garment industry in Egypt is managed by experience. Relying its

decisions on a scientific yet practical ground engaged with experience is an important

matter that allows it to cope with global developments in the field. Thereby, the

beginning of the plan implementation was initiated from a deterministic model just to

have a hand on the most frequent problem to tackle them together and then there would

be further improvements that would consider the uncertainty of different aspects. At that

point, the model would expand to a more sophisticated phase.

1.3 Thesis Outline

The rest of this thesis is organized as follows. Chapter 2 is a review of the literature

addressing the thesis topic. Chapter 3 is a presentation and explanation of the developed

model. The model validation and verification is highlighted in chapter 4 followed by the

computational results and analysis in chapter 5. Closing with the conclusions obtained

from the work and further recommendations for future work in chapter 6.

Three appendices are provided at the end of the thesis that present the input data and

results for multiple MTO – MTS products.

8
 Chapter 2 Literature Review

Make to order production does not always guarantee an on spot payment. It just ensures

that there will be a cash inflow during a future period, which cannot be the only reliable

source of revenue for sustaining a garment manufacturing facility. Therefore, firms plan

to produce for stock. Although there are trade-offs for both modes of production,

planning a made to order or made to stock only manufacturing environment is easier than

planning both types of production in the same environment. This is very clear throughout

the relevant literature. Research in the production-planning field for either MTO or MTS

production systems is addressed quite often in literature than that with both modes of

production within the same system. Limited number of papers that do consider them

together focused on the Textile industry.

This chapter introduces a review of the aforementioned topic. It is divided into three

primary areas related to the research at hand: the first deals with production planning in

the garment industry, the second part focuses on production planning related to MTO

environments and the third part deals with garment production planning for MTO and

MTS production policies.

2.1 Production planning in the garment industry

Several research papers covered in production planning in the apparel industry. Wong and

Chan (2001) proposed a heuristic framework that included master production scheduling

(MPS) for an apparel factory. Its target was to minimize the total cost whether the

demands were completed before or after their due dates and to minimize the presewing

operations completion time.

9
Mok (2011) stated that the apparel manufacturing environment is a fuzzy environment

and hence an effective production planning for such an environment would be difficult.

Therefore, he suggested an intelligent production algorithm for the garment

manufacturing environment where he applied fuzzy set theory, genetic algorithms (GA)

and multi-objective genetic algorithms (MOGA).

Guo, et.al (2006) used a job shop scheduling (JSS) model for a mixed- and multi-product

assembly apparel environment to meet demands. The proposed model was solved by

applying GA. The objective of the proposed model is to minimize the total penalties of

earliness and tardiness by deciding orders’ production starting time and the way of

assigning different operations to operators.

Chen, et.al. (2012) developed a grouping genetic algorithm (GGA) for assembly line

balancing problem (ALBP) particularly for sewing operations in the garment industry.

Mok, et.al. (2013) used also GA in conjunction with group technology to obtain

automatic job allocations that ensures an effective utilization of resources and jobs

completion.

Ünal, Tunali and Güners (2009) research also suggested a heuristic algorithm for the line

balancing problem in the apparel industry and tested its validity by using various line

configurations through simulation.

Choy, et.al. (2011) combined genetic algorithm with an optimization model in a hybrid

scheduling decision support model (SDSM) that solved the scheduling problem in a made

to order work place. The model considered job tardiness and process variations to achieve

a high productivity level.

2.2 Production Planning in MTO production systems

10
Often the production planning reported in literature is devoted to make-to-stock (MTS)

production systems. The decision-making problems for make-to-order (MTO) production

systems differ from that of MTS. In MTO, delivery dates are crucial, although the

demands are uncertain in quantities and times; hence, it requires smart detailed

production plans that enable full control of the production inflow and outflow.

Yeh, (2000) presented an approach for planning multi-product levels that uses a bill of

material and data routing in organizing production data to accommodate customer orders

specifications. This in turn enables them to negotiate order adjustments that might include

allowing for changes in delivery schedules. Due to different constraints, the system is

able to fulfill only some of them and the rest are rejected. Under this condition, MTO

companies have to accept an optimal combination of the arriving orders so that their

profit and share in the competitive market increase. The main criteria to select this

optimal combination in such environments are short delivery times and high quality.

Therefore, companies that produce according to MTO systems, are not able to predict the

arrival time of orders and have to deliver the arriving orders quickly. Such companies

need a decision-making structure which helps them manage the arriving orders to meet

these main criteria.

Ebadian, et.al (2008) introduced a decision making structure for the order entry stage for

a MTO system. The decisions were based on two factors. One was the price; the other

was the delivery time whether fixed or flexible (if it could be negotiated). The

mathematical model adopted was mixed integer programming. The structure made the

decision on the arriving orders based on certain factors; determining the rejected

11
undesired orders and computing the prices and delivery times of the accepted orders

bounded by some constraints. The main challenge of such a MTO program was to

process directly the arriving orders that are only profitable and feasible to the system.

Acceptance and rejection of orders in made to order systems is a challenging task

therefore a decision making structure to improve the decision quality at the order entry

stage would be vital.

Gharehgozli, Rabbani, zaerpour and Razmi (2008) introduced a decision structure to

manage arriving orders but they divided the structure into two main phases. The first

phase was designed to arrange orders according to order times, material arrival, and due

dates. The second phase was decided upon orders using a hybrid methodology that

combines analytical hierarchy process (AHP) with technique for order performance by

similarity to ideal solution (TOPSIS).

Hemmati, Ebadian and Nahvi (2012) also created a decision making model to manage

arriving orders, but they first divided them according to order priority. High or low

priority depends on the order characteristics and TOPSIS. Orders were divided according

to their due dates, material requirements and availability. Then a rough cut capacity plan

for the orders was used to check which order would be feasible for the system.

Ebadian, Rabbani, Jolai and torabi (2009) proposed a hierarchical production planning

structure in MTO companies that consisted of three decision levels: order entry, order

release and order sequencing. Their target was to meet due dates by improving delivery

date performance using a smooth production schedule. The last two levels were validated

through numerical trials and simulation. The aim of the proposed hierarchy is to manage

12
arriving orders using certain decisions per level, so as to have shorter, reliable delivery

dates.

Soman, Donk and Gaalman (2004) developed a hierarchical planning system to decide

which products to make- to- stock and which to make- to- order in the food industry. The

authors considered capacity restrictions and varying set-up time between different

products where the decision plan related to food. In the same fashion, Rajagopalan,

(2002) developed a nonlinear integer programming model to decide which orders to make

to stock and which to make to order, their inventory levels and selecting a production

policy for the made to stock items. Rajagopalan (2002) put a penalty constraint to the lead

time for MTO items and stated that he could have made MTO demands function in the

lead time of each item in the demand. One of the aspects he considered in his model was

the fractional lot sizes, re-order points and continuous distribution which forced model

approximations. However, various aspects of the model presented here, such as the cost

expression, fractional lot sizes and reorder points, and continuous-demand distributions,

may be poor approximations in such scenarios.

2.3 Mixed MTO and MTS production systems

Wang and Rosenshine (1983) selected a heuristic rule for given orders, where some are

with due dates (made- to -order) and others are not (made to stock). Their objective was

to schedule the orders so that the mean flow time was minimal while satisfying their due

dates. There were two types of conflicts that appeared to them, the first was related to the

job timings; the other was with or without due dates.

Kaminsky and Kaya (2009) provided a decision guidance on when to use made to order

or made to stock approaches in centralized and decentralized supply chains. They

13
analyzed the benefit of using each system depending on specific circumstances, and how

to operate the overall system in order to minimize the costs. Kamisky and Kaya also

quoted due date per customer at arrival time. All that was explored analytically,

inventory, scheduling, lead time decisions but in the context of supply chains where they

elaborated on the effect of the supplier-manufacturer relationships in such system.

Rafiei, Rabbani and Kokabi (2014) addressed production planning of a multi-site hybrid

made-to-stock/ made-to-order manufacturing firm. They developed a mathematical model

that seeks to maximize manufacturing firm's profits.

Carr and Duenyas (2000) addressed the problem of modeling complex admission control

and sequencing of different product segments. This was done by developing a M/M/1

queueing model to help the firm take former decisions into account when deciding which

type of product to produce next and the annual quantities for MTS products. One of the

major gaps which should be taken into consideration was the setup cost for different

products. This would influence the production sequence and how decisions were made to

accept an order, hence that point needed more elaboration.

Zhang, Zheng, Fang and Zhang (2015) proposed a mixed integer non-linear programming

model aimed at solving the multi-level inventory matching problem. They focused on

order planning for a hybrid MTO and MTS production planning strategies, as applied to

the steel production environment. Multiple objectives were considered, such as penalty

cost of earliness and tardiness, production costs, inventory matching cost, and order

cancelation penalty. The infeasibility and inventory re-matching were treated through a

proposed improved particle swarm optimization method.

14
Beemsterboer, Land and Teunter (2016) examined the advantages of hybrid planning

approaches for both MTO and MTS by developing a Markov Decision process model.

The system determines when to manufacture MTO and when to produce MTS products,

while considering positive lead time for MTO products.

Morikawa, Takahashi and Hirotani (2014) investigated different policies for MTS

production at a multi-stage serial system in traditionally MTO production environment.

Their primary objective was to minimize the average orders' lateness with less MTS

inventory. The performances of these policies were tested using simulation experiments.

The semi-finished products were considered the MTS items and restrictions applied

according to specifications and amounts. The criteria for selection were based on different

rules “Buffer selection”, “matching acceptance” and ”MTS replenishment

rules”.

Zhang, et.al. (2013) analyzed the performance measures of a hybrid MTS-MTO system

for the same product using an analytical model. The dynamic switch between MTO-MTS

was operated through a multi-server queuing model.

Günalay (2011) used two scheduling strategies (first in first out and cyclic service) to

decide which scheduling policy to use for MTO versus MTS products in a single facility.

The decision for both policies was based on the total cost, inventory and order delay cost.

Rafiei and Rabbani (2011) developed a mixed integer linear programming model to

decide order partitioning, and to determine order penetration point location for a hybrid

MTO/MTS delivery strategy.

Soman, Donk and Gaalman (2004) proposed a method for successful integration of the

combined MTO and MTS but focused on the food industry. In 2007 they tackled the

15
combined MTO/MTS situations by identifying possible analytical decisions for shortterm

batch-scheduling using heuristics. The updated approach was adopted when the

researchers found the hierarchical frame work suggested by them in (2004) was generic

and lacked analytical decision aids.

Ohta, Hirota, & Rahim, (2007) analyzed a multi-production inventory policy for MTO

versus MTS. The analysis was based on a queuing model where the optimality condition

was based on which product is made-to-order and which is to stock. They computed the

optimal base-stock level.

Zaerpour, Rabbani, Gharehgozli, and Tavakkoli-Moghaddam (2008) presented a hybrid

approach to decide which item will be made- to-order and which to stock using a strategic

method strengths and weaknesses, and the opportunities and threats (SWOT) analysis and

a fuzzy analytical hierarchy process (FAHP). Combining both methods reached a

decision for orders partitioning by producing quantitative values for the SWOT factors.

However the novel approach did not consider important constraints such as the firm’s

capacity and due date.

Hadj, Delft and Dallery (2004) used two different scheduling rules for combined MTO

and MTS manufacturing system. MTS policy went under FIFO scheduling whilst MTO

was considered of low volume and went under priority rule policy. Optimum solutions for

each system were developed analytically and numerically.

Van Donk (2001) indicated that managers in the food industry found difficulty in

deciding which products to make to order and which to stock. Van Donk developed a

framework that helped make such decisions. Taking into consideration the market

characteristics and the production process. The developed framework was based on the

16
concept of the general decoupling point which was adapted to the specifications of the

food industry.

Arreola-risa (1998) also used an analytical way to study the optimality conditions for

MTO versus MTS for multiple products. The production times were general random

variables, and the demands have different arrival rates and are independent Poisson

processes. Khakdaman, et.al. (2015) developed a robust model for hybrid MTO/MTS

multi-product firm. They incorporated suppliers, processes and customers in the presented

model so as to examine their uncertainties, and validated their proposed model by

applying it to an industrial case. Eltawil and K.W. (2011) proposed a hierarchal frame

work for production planning for a hybrid MTO and MTS production in the textile

industry at the tactical level.

2.4 Existing techniques in the literature and research gap

1. Production and capacity planning for a mix of multi-period, multi-product

demands (MTO and MTS) in a ready-made garment-manufacturing environment,

is still a ripe yet challenging area.

2. Engaging a financial aspect; cash flow; as a constraint with production, inventory

and capacity aspects in a model, was not adequately addressed.

In the apparel industry, most of the research has focused on applying heuristic and

hierarchy techniques to help the decision maker achieve the production goals. It is

apparent that production planning in a combined MTO and MTS garment manufacturing

environment was not tackled enough in literature. Considering capacity utilization with

financial aspects were not jointly addressed. Thus targeting certain or near optimal

17
production and capacity plan for a mix of MTO and MTS demands, is still an open

question.

2.5 Thesis objectives

The objective of this work is to help the management team in a garment factory have

practical insights on the decisions to take based on the costs versus the expected revenues

for arriving orders (MTO) versus planned production (MTS) for a season.

The presented model in this study is devoted to medium size factories which have limited

resources, and cannot afford more expenses to improve their productivity. At the same

time, they cannot adopt sophisticated techniques used by large companies nor can they

deal easily with complicated heuristics. Yet, they still need to maximize their revenues as

far as possible, while considering their capacity constraints and meeting their production

targets. The unique problem facing such garment factories is not well addressed in the

literature, which is production and capacity planning for a mix of MTO and MTS

production while considering influential parameters that governs the garment production.

This research is mainly concerned with the decisions taken at the aggregate planning

level. The following chapter; chapter 3; introduces a Mixed-integer linear programming

(MILP) model that is formulated to take into account the important aspects that influences

the decisions at that level of planning and provides an optimum production plan for the

addressed problem.

Chapter 3 The Proposed MTO/MTS Production Planning Model

3.1 Problem description

18
Management of MTO and MTS production together in a readymade garment factory is a

challenging problem. Particularly if the planning horizon is short, due to the nature of the

industry, and if one of the systems was the only applicable kind of production. Various

garments require different number of labor hours and amount of fabric per garment and

the factory has limited capacity and financial resources finances. Also, once fabric is

ordered, the factory must provide the enough cash to pay for it.

The fabric is acquired from two main sources; a retailer or a wholesaler. The retailer price

is 10-15% above the wholesale price. In order to purchase from a wholesaler the amount

purchased should not be less than 30 meters of fabric of the same type.

The amount of products decided for the MTS production, determines whether its fabrics

will be purchased from a retailer or a wholesaler. Past data showed that the MTS fabrics

were bought from a retailer without any discounts, due to the small quantities and in other

season was due to the occurrence of a variety of MTS products with limited amounts per

product.

Fabrics for MTO garments are purchased only if the order is received, while for the MTS

case, fabrics are purchased based on the cash availability and production capacity.

Therefore, it is essential to identify the time, and amount of fabric purchased while

observing the cash availability. Smooth production requires that fabric supply is

guaranteed before the beginning of production of the perspective product/order.

The management team aims at having a production plan for the factory that considers a

successful operation of seasonal MTO and MTS production simultaneously, within the

19
available resources. To achieve an optimum plan, major trade-offs from the interaction of

both production types and their implications on the cash and revenue at the end of the

season have to be considered. Trade-offs such as, capacity allocation for both production

types during different seasons, producing an order in an early period and storing it or

producing it in a latter period, and considering overtime or maybe subcontracting

sometimes to be able to meet-up with the orders due dates.

Moreover, what if the forecasts for MTS are high and the MTO demands are low, would

the cash available at the beginning of the season and the cash generated from the MTO

along the planning horizon be sufficient to produce targeted stocks and still generate a

profit?

Since fabric comprises a high percent of a garment cost, the amount of products decided for

MTS production determines whether its fabrics will be purchased from a retailer or a

wholesaler.

Fabrics for MTO garments are purchased only if the order is received, while for the MTS

case, fabrics are purchased based on the cash availability and production capacity.

Therefore, it is essential to identify the time, and amount of fabric to order while

observing the cash availability.

Planning the production and delivery of garments under the fore-mentioned trade-offs,

while considering the cash flow during the planning horizon was a challenging problem.

Therefore, decisions need to be made to deal with these trade-offs. Such as the amount of

fabric supplied and its ordering time, inventory levels (fabrics inventory, the work in

process inventory, finished garment inventory), regular and overtime production

20
quantities, periodical cash availability and the optimum amount of MTS production along

with different MTO amounts.

The objective of the developed model is to maximize the net profits for various garments

required for either MTO/MTS customer, while maintaining a positive cash flow

throughout the planning horizon.

The proposed model is a deterministic model that is developed for a mix of MTO and

MTS production within the limited resources. The model maximizes the net revenues

resulting from the MTO and MTS sales along the planning horizon. It also provides an

optimal production plan that deals with frequent production scenarios.

The main difference between MTO and MTS in the model is that the MTS products are

produced and stocked along the planning horizon to meet the forecasted amounts, and no

sales occur in the first four periods for the MTS.

3.2 Model Assumptions

1. Fabrics arrive on time.

2. The cost of other materials/subassemblies required for producing the garment

(threads, buttons, zippers…) are included in the fabric cost.

3. Service wear products are produced based on MTO policy while children wear

products are produced on a MTS policy.

4. MTO are confirmed orders at the beginning of the season.

5. Overtime is allowed for MTO and MTS production.

6. Initial inventory for material is zero for both product in categories.

7. The production capacity is known and fixed.

21
 8. Subcontracting is allowed for MTO products only.

9. The planning horizon is 1 season, equivalent to 12 weeks.

10. Production cost includes labor cost and maintenance cost.

11. Once an order is delivered its cash is received.

12. No down-payment for MTO items.

13. Safety stock is not considered for neither MTO fabrics nor MTS products.

14. There is no minimum batch size required for subcontracted products.

3.3 Model formulation

3.3.1 Index sets

Set index

T: set of time periods t

M: set of made to order (MTO) products m

J: set of made to stock (MTS) products j

F : set of fabric types f

3.3.2 Input parameters

Symbol Interpretation Units

𝑰𝑪𝑭𝒇𝒕 Inventory holding cost of fabric f during period t EGP/m2/week

𝑰𝑪𝑶𝒎𝒕 Inventory holding cost per unit of MTO product m during EGP/unit/week
period t.

𝑰𝑪𝑺𝒋𝒕 Inventory holding cost per unit of MTS product during EGP/unit/week
period t.

Inventory of fabric f at time period t=0 m2

IFf0

𝑰𝑺𝒊𝒏 Inventory of MTS product j at time period t=0 unit

22
𝑹𝑪𝑶𝒎 Regular time production cost per unit of MTO product m. EGP/unit

𝑹𝑪𝑺𝒋 Regular time production cost per unit of MTS product j. EGP/unit

𝑶𝑪𝑶𝒎 Over- time production cost per unit of MTO product m. EGP/unit

𝑶𝑪𝑺𝒋 Over- time production cost per unit of MTS product j. EGP/unit
𝑺𝒃𝑪𝒎𝒕 Subcontracting cost for MTO product i during time period EGP/unit
t.

𝜶𝑶𝒇𝒎 Amount of fabric f used to make one unit of MTO product m2.fabric
m.

Amount of fabric f used to make one unit of MTS product m2.fabric

j
labor hours required to process one unit of MTO product hrs/unit
m.
labor hours needed to produce one unit of MTS product j. hrs/unit
𝒉𝑺𝒋

Hmax Maximum available regular production hours. Hrs

G max Maximum allowed overtime production hours. Hrs

wf Warehouse space needed per square meter of fabric f m2/ m2of fabric

Wmax Maximum fabric warehouse capacity for fabrics m2

𝒗𝑶 𝒎 Storage space requirements per unit of finished MTO m2/unit

product m

𝒗𝑺𝒋 Storage space requirements per unit of finished MTS product m2/unit
j

Vmax Maximum storage capacity for MTO and MTS final products m2

Dmt Confirmed orders at the beginning of the planning horizon units

Fjt Forecasted demand for MTS product j during period t units

𝒑𝑶𝒎 Selling price of one unit of MTO product m EGP/unit

𝒑𝑺𝒋 Selling price for one unit of MTS product j EGP/unit

23
 rfk Purchase price r of fabric f at level k, where k=1,2, indicating EGP/ m2
the two pricing levels.

qf Minimum meters of fabric so that the discount is offered/ can m2

purchase from a wholesaler.

Minimum batch size for production of MTO product m Units

𝑩𝑶𝒎

𝑩𝑺𝒋 Minimum batch size for production of MTS product j Units

C0 Initial cash available at the beginning of the planning EGP
horizon

CT Minimum final cash targeted at the end of the planning EGP

horizon

L A Large positive number

3.3.3 Decision variables

FQfkt Quantity of fabric f ordered at price level k during period t m2

IFft Inventory of fabric f by the end of period t m2

CHt Cash available by the end of period t EGP

𝑰𝑶𝒎𝒕 WIP Inventory level of MTO product m by the end of period t unit
𝑰 𝑺
𝒋𝒕 WIP Inventory level of MTS product j by the end of period t unit
Regular time production quantity of MTO product m during period t unit

Regular time production quantity of MTS product j during unit period t

overtime production quantity of MTO product m during period t unit

overtime production quantity of MTS product j during period t unit
bft Binary integer variables, bft =1 if fabric f is purchased for price level k=2, in time
period t.

Smt Subcontracting amount of product m at time period t units

Binary integer variables,
=1; if MTO product m is produced during period t, =0 otherwise.

Binary integer variables,

=1; if MTS product j is produced during period t,
=0 otherwise.

24
3.3.4 The objective function

The objective function aims at maximizing the firm’s total profits ‘P’ which is the net

value achieved from subtracting potential cost elements from sales revenues.

Maximize Profit: P = Total Revenues – Total Costs.

The Total Revenues = the total sales value at the end of the planning horizon for made to

order products m and made to stock products j.

The revenues are expressed mathematically as:

The total production costs are the sum of the regular costs, overtime costs, fabric costs,

inventory holding cost for fabrics, work in process and final products over the planning

horizon T and the setup cost.

Therefore, the objective function is expressed as follows:

− ∑𝑗∈𝐽 𝑅𝑗𝐶𝑆 ∑𝑡𝜖𝑇 𝑅𝑗𝑡𝑆 − ∑𝑗∈𝐽 𝑂𝑗𝐶𝑆 ∑𝑡𝜖𝑇 𝑂𝑗𝑡𝑆 − ∑𝑡∈𝑇 ∑𝑓∈𝐹 𝑟𝑓𝑘 𝐹𝑄𝑓𝑘𝑡

− ∑𝑡𝜖𝑇 ∑𝑖𝜖𝐼 𝑆𝑏𝑖𝑡𝐶 𝑆𝑖𝑡 (1)

3.3.5 Constraints

Initial fabric inventory is indicated by constraint (1) while constraint (2) represents the

material balance constraints for MTO and MTS products. Initial inventory for MTS

production is represented by equation (3). Equation (4) indicates inventory balance

25
equation for meeting MTS forecast. Constraint (5) indicates MTO demand satisfaction

constraint.

Equations (6) and (7) are for the capacity constraints for regular and overtime products

respectively. Fabrics storage capacity constraint is denoted by equation (8). The storage

capacity for MTO and MTS final products is illustrated by equation (9). Equations (10)

and (11) are developed for the quantity discount on fabric purchase. where k represents

the two price levels, k =1 means that no discount is offered for a quantity less than qf , as

illustrated by equation (10), while k=2 means that the amount purchased is greater than qf

and therefore the discount is offered, equation (11). Equation (12) represents the initial

cash at the beginning of the planning horizon.

The cash balance for the first four periods of the planning horizon is presented by

equation (13). Equation (14) indicates the cash balance from period 5 to the end of the

planning horizon, where the MTS sales take place with the MTO sales. The final cash at

the end of the planning horizon should be greater than or equal an amount CT, as denoted

by equation (15).

Equations (16) and (17) satisfy the minimum batch production for MTO production. MTS

minimum batch production is presented by equations (18) and (19) is for non-negativity

constraints.

IFft-1 + FQfkt – = IFft ,

26
− ∑ ∑(𝑹𝑪𝑺𝒋 𝑹𝑺𝒋𝒕 + 𝑶𝑪𝑺𝒋 𝑶𝑺𝒋𝒕 ) = 𝑪𝑯𝒕 , 𝒇𝒐𝒓𝒂𝒍𝒍 𝒕 𝝐𝒕𝟏 , 𝒘𝒉𝒆𝒓𝒆 𝒕𝟏
𝒋𝝐𝑱

= { 𝟏, 𝟐, 𝟑, 𝟒} (𝟏𝟑)

𝑪𝑯𝒕−𝟏 + ∑ ∑ 𝒑𝑶𝒎𝑫𝒎𝒕 + ∑ 𝒑𝑺𝒋 𝑭𝒋𝒕

𝒎𝝐𝑴 𝒕𝝐𝑻 𝒋𝝐𝑱

− ∑ ∑ 𝒓𝒇𝒌 𝑭𝑸𝒇𝒌𝒕 − ∑ ( 𝑹𝑪𝑶𝒎 𝑹𝑶𝒎𝒕 + 𝑶𝑪𝑶𝒎 𝑶𝑶𝒎𝒕 )

𝒕𝝐𝑻 𝒇𝝐𝑭 𝒎∈𝑴

− ∑ ∑(𝑹𝑪𝑺𝒋 𝑹𝑺𝒋𝒕 + 𝑶𝑪𝑺𝒋 𝑶𝑺𝒋𝒕 ) = 𝑪𝑯𝒕 , 𝒇𝒐𝒓 𝒕 𝝐 𝒕𝟐 , 𝒘𝒉𝒆𝒓𝒆 𝒕𝟐

𝒔𝝐𝑺 𝒋𝝐𝑱

27
 = 𝟓, 𝟔 … . 𝟏𝟐. (𝟏𝟒)

𝑹𝑺𝒋𝒕 + 𝑶𝑺𝒋𝒕 ≥ 𝑩𝑺𝒋 𝜻𝑺𝒋𝒕 ; ∀𝒋, ∀𝒕 (𝟏𝟖)

𝑭𝑸𝒇𝒌𝒕, 𝑰𝑭𝒇𝒕, 𝑪𝑯𝒕 , 𝑰𝑶𝒎𝒕 , 𝑰𝑺𝒋𝒕 , 𝑹𝑶𝒎𝒕 , 𝑹𝑺𝒋𝒕, 𝑶𝒎𝒕𝑶 , 𝑶𝑺𝒋𝒕, 𝑺𝒎𝒕 ≥ 𝟎 (𝟐𝟎)
3.4 Model Characterization

The size of the MILP model developed in the previous section can be determined from

the cardinality of the sets used in the model as detailed in table 3. Likewise, the total

number of integer variables, binary variables in addition to the number of constraints can

be figured out precedently as shown in table 4.

Table 1: Size of the model components

Model Component Number

Variables

FQfkt |F||K||T|

IFft |F||T|

𝐼𝑚𝑡𝑂 |M||T|

𝐼𝑗𝑡𝑆 |J||T|

28
 𝑅𝑚𝑡𝑂 |M||T|

𝑅𝑗𝑡𝑆 |J||T|

𝑂𝑚𝑡𝑂 |I||T|

𝑂𝑗𝑡𝑆 |J||T|

Smt |M||T|

CHt |T|

bft (binary variable) |F||T|

𝜁𝑚𝑡𝑂 (binary variable) |M||T|

𝜁𝑗𝑡𝑆 (binary variable) |J||T|

Constraints

Fabric inventory constraints for MTO and MTS products |F||T|

Material balance for MTO production |M||T|

Material balance for MTS production |J||T|

Regular production capacity |T|

Overtime production capacity |T|

Fabrics storage capacity |T|

MTO and MTS products storage capacity |T|

No Quantity discount on fabric purchased offered |F||T|

Quantity discount on fabric purchased offered |F||T|

Initial cash |T|

Cash balance constraint when no sales for MTS happens |T|

Cash balance for the rest of the planning horizon |T|

Minimum batch constraint for MTO |M||T|

29
Minimum batch constraint for MTS |J||T|

Table 2: Size of the total number of variables and constraints

Model component Size

Total number of non-negative integer variables T+ FKT+ FT + 4MT+ 4JT

Total number of binary variables 3FT+ MT+JT+4T

Total number of constraints 3FT+ 2MT+ 2JT+ 7T

Given that for the current model, the planning horizon T is 12 periods, the number of

fabric types F used is only four types and the price levels k are two levels, then the size

of the model is controlled by the number of MTO and MTS products. Accordingly, for

different number of MTO and MTS products, the problem size can be determined before

hand as laid out in table 5, and the time taken by CPLEX to converge to an optimal

integer solution.

Table 3: Problem size for different number of MTO/MTS products

MTO, MTS Computational Number Number of Number of
time of binary integer
variables variables
constraints
2, 4 00:00:08:54 1531 120 414
4, 8 00:00:10:46 1589 192 686
8, 16 00:00:01:47 2945 336 1178
16, 32 00:00:10:46 6233 624 2162
32, 64 00:00:21:89 15113 1200 4130
64, 128 00:05:43:47 42089 2352 8066

The problem with different sizes was solved on a server with the following specifications:

30
AMD opteron ™ processor 6174 2.2GHz (2 processors), 128 GB (RAM) - system type:

64-bit operating system, X 64-based processor.

Since the model size can be anticipated from the cardinality of the variables and

constraints, figure 2 depicts the pattern of the problem size when the number of products

increases, leading to an increase in the number of the variables and constraints.

45000
40000
35000
30000

25000 No. of constraints

20000 No. of binary variables

No. of integer variables
15000
10000
5000
0
2,4 4,8 8,16 16,32 32,64 64,128

Figure 5: Problem size vs. model characteristics

The Model was solved using the optimization solver IBM® ILOG® CPLEX®

Optimization Studio V12.7.1. It uses mathematical and constraint programming. The

Optimization Programming Language (OPL) built-in tools for tuning and conflict

detection enabled a rapid and accurate deploying of the model for its high performance

solver. CPLEX can choose the best algorithm from the multiple algorithms provided for

various kinds of models [1]. Computational experiments for different number of MTO

31
and MTS products were examined. Inputs and Outputs for multiple of products are given

in Appendix A and B.

Chapter 4

Model verification and validation

This chapter describes the computational working plan in order to verify and validate the

proposed mathematical model. The first section of the chapter involves the verification

phase where a base case was examined in order to verify the model and ensure the

correctness of the solver output. The second section of the chapter is concerned with the

validation stage for the model and it included three cases. The first case is considered to

be the essential case as it used actual data and its output was compared with the output

from a real life case. The second case was implemented to make sure that the quantity

discount constraint is working correctly and the third case was carried out to examine the

model performance for an extreme situation.

4.1 Model verification

An important aspect of the verification procedure was to confirm that the model was

encoded properly before applying different cases. Using CPLEX optimization studio

V12.7.1, exporting the model to an LP file is a way to log exactly how it is read and

ensure that the model is generated correctly.

The base case

32
The model was tested using the data for an industrial case, which is treated as the base

case for the computational experiments. The plant and input data are presented in the

following section followed by the results and discussion of the base case output.

Case study description

This research considers a traditional Garment manufacturing facility. The Firm

manufactures different types of garments. The factory used to produce only make-toorder

production for the last five decades. Although make-to-order production guarantee its

market, but it often encountered stressing operational schedules so as to meet the due

dates. In the recent years, the factory faced many problems due to either inability to meet

due dates or difficulty in receiving orders’ cash promptly after its delivery. Consequently,

many obstacles were raised due to the unavailability of sufficient cash for future

scheduled orders. Therefore, the number of received orders was diminished, which

caused a recognizable unutilized capacity. To overcome such obstacles, the management

team sought of establishing a brand for children wear, which will be the MTS production

stream, unlike the MTO products, which are service wear. The start-up cash for the

maketo-stock production was relevantly small for the new production stream. Make-to-

stock production type differed than those for make-to-order, the make-to-order was

service wear and required experienced workers for its complicated technical operations,

while the make-to stock is often children wear and was technically much simpler. The

attempt was taken by trying only two products (MTS) per season. From the historical data

for the past two years, the sales made by the selected MTS products; although the

production was not as big as MTO; have built rapid cash inflow within its season. In

addition it has received remarkable high demands, hence, the planner need to have

33
smarter decisions for managing the MTO and MTS together within the available capacity

and finances of the

firm.

The proposed model was applied to AMDC Company; it is one of the leading companies

in readymade garments in Egypt specialized in service wear garments in particular. The

company was established in the early 1980s producing different service garments to

different governmental sectors. All of the company production until 2014 was only based

on MTO strategy, and recently they considered producing to stock as part of their

production plan in order to enhance their revenues. Since the facility included the mixture

of both production types therefore it was a suitable application for the proposed model.

Based on historical demands for MTO, there were two main products, which were highly

demanded; which are the suits (MTOprod1) and the two-piece overalls (MTOprod2). In

the computational work, those were the products considered for MTO along with the

seasonal products for MTS. The production capacity data obtained from the factory were

as shown in table 6 for the regular, overtime and storage capacities. The regular hours are

48 hours per week and the over-time hours are 12 hours per week.

Table 4: Production capacity data for the base case

Capacities available per period

Regular Capacity Hmax 1300 hrs

Overtime Capacity G max 330 hrs

Storage capacity for Final products Vmax 900 m2

Storage capacity for fabrics Wmax 100 m2

34
In all the computational runs, a period is one week, and there are four common types of

fabrics that are used for MTO or MTS production. Therefore, those are the only ones

considered. Fabric input parameters are given in table 7 Followed by MTO and MTS

input data in tables 8, 9, 10 and 11.

35
36
 Table 10: Base case optimal results
products variables amount period
𝑹𝑶𝟏𝒕
1000, 215, 806, 1000, 99, 1000, 1000 1, 2, 3, 4, 6, 8, 12
𝑶𝑶𝟏𝒕
0
MTO 1
𝑰𝑶𝟏𝒕
1000, 695, 1501, 1, 1, 100, 100 1, 2, 3, 4, 5, 6, 7
S1t
0
𝑹𝑶𝟐𝒕
785, 206, 401, 1000, 500, 500, 1000 2, 5, 6, 7, 9, 10, 11
𝑶𝑶𝟐𝒕
0
MTO 2
785, 270, 476, 877, 500, 1000, 2000 2, 3-4, 5, 6, 9, 10, 11
S2t
723 7
𝑹𝑺𝟏𝒕 400, 500, 500 5, 6, 10

MTS 1 𝑶𝑺𝟏𝒕 0
𝑰𝑺𝟏𝒕 250
𝑹𝑺𝟐𝒕 1

MTS 2 𝑶𝑺𝟐𝒕 205, 194, 199, 217, 108, 275 3, 4, 5, 6, 7, 8

𝑰𝑺𝟐𝒕 206, 117, 25 3, 6, 7
𝑹𝑺𝟑𝒕 251, 511
220, 29, 89, 200
MTS 3 𝑶𝑺𝟑𝒕
20, 20
1, 3, 5, 7
𝑹𝑺𝟒𝒕 0

MTS 4 𝑶𝑺𝟒𝒕 100, 300, 50, 88 1, 2, 3, 4

𝑰𝑺𝟒𝒕 100, 50 1, 3

37
The input data distribution was based on historical demand patterns while for the MTS

was mainly desired to be produced in the first quarter of the planning horizon. The results

for the base case are presented in table 12 with an optimal integer objective of 153226

EGP. Where the model decisions to produce in regular, overtime /subcontract or hold in

inventory were seized on costs only.

Results for amounts of fabric purchased per period and their inventory levels are

indicated in tables 13 and 14.

Table 11: Base case fabric purchasing amounts and their inventory levels
FQf2t

Periods

Fabric 1 2 3 4 5 6 7 8 9 10 11 12
F1 4159 0 0 0 0 17 3000 0 1500 1500 3000 0
F2 9360 0 0 0 0 0 0 3000 0 0 0 3000
F3 1800 0 0 0 0 0 0 0 0 1000 0 0
F4 1313 0 0 0 650 217 258 275 0 0 0 0

Table 12: Base case fabric inventory levels

IFft

Periods

Fabric 1 2 3 4 5 6 7 8 9 10 11 12
F1 4159 1804 1804 1804 1186 0 0 0 0 0 0 0
F2 6360 5715 3297 297 297 0 0 0 0 0 0 0
F3 1800 1800 1800 1800 1000 0 0 0 0 0 0 0
F4 1048 748 282 0 0 0 0 0 0 0 0 0

The cash flow per period for the base case is indicated in figure 3

38
 cash/period
500000
400000
300000
200000 cash/period

100000
0
1 2 3 4 5 6 7 8 9 10 11 12

Figure 6: cash flow for base case

Table 16, indicates the periods where MTO and MTS production occurs and satisfying a

minimum batch production.

Table 13: 𝐏𝐫𝐨𝐝𝐮𝐜𝐭𝐢𝐨𝐧 𝐩𝐥𝐚𝐧 for MTO and MTS produced during period t

4.2 Model Validation

39
Model validation was performed in order to validate the solver output solutions and

evaluate expected outcomes from real and extreme scenarios that help at highlighting the

limitations of the underlying model. The test cases indicated in table 17 were used for

that purpose. They impart the objectives mentioned in the second column of the table and

their expected gains.

Table 14: Cases considered for model validation

Case Objective of the case Expected solve output

1. Limited MTO and The objective of the case is Zeroes in most periods and
considerable space to show that depending small revenue is realized.
capacity. solely on the MTO; Actual data was used for
especially when the arriving this case.
orders diminish; was in
efficient.
2. No quantity discount To ensure that the fabric Fabrics required for MTS
for fabric purchased quantity discount equations products will be purchased
for MTS products. are working correctly. at price level rf1 and the
amounts will be decided for
their perspective periods for
the decision variable FQf1t .
3. Case where the To show how the MTS is Higher inventory costs and
model chooses profitable provided that lower revenues.
mainly there is enough money, that
MTO/MTS. can funds its production and
its market is guaranteed.

Case 1: Limited MTO and considerable space capacity

The first case in the validation is the case when the factory used to produce only MTO

products. The table below represents actual demands from historical data and their output

solution.

40
 Table 15: Validation - Case 1
MTO 1 0 0 0 80 0 0 0 0 0 666 0 0
Demand
MTO 2 0 0 0 0 0 0 0 0 0 0 800 0

products variables 1 2 3 4 5 6 7 8 9 10 11 12

𝑹𝑶𝟏𝒕 746 0 0 0 0 0 0 0 0 0 0 0
𝑶𝑶𝟏𝒕 0 0 0 0 0 0 0 0 0 0 0 0
MTO 1
𝑰𝑶𝟏𝒕 746 746 746 666 666 666 666 666 666 0 0 0
S1t 0 0 0 0 0 0 0 0 0 0 0 0
𝑹𝑶𝟐𝒕 254 196 0 0 0 0 0 0 0 0 137 0
𝑶𝑶𝟐𝒕 0 0 0 0 0 0 0 0 0 0 213 0
MTO 2
𝑰𝑶𝟐𝒕 254 450 450 450 450 450 450 450 450 450 0 0
S2t 0 0 0 0 0 0 0 0 0 0 0 0

Results displayed for case 1; table 18; confirmed the results from the factory that there

was an obvious large capacity not in-use as indicated by the zeroes for many periods and

although the model solution moves towards maximizing the revenues, there were barely

any revenues realized which support the attempt of initiating a MTS production stream.

Case 2: No quantity discount for fabric purchased for MTS products.

Fabric quantity discount constrained was confirmed as shown in the solution for the 64,

128 MTO, MTS products and the 32, 64 as well, as tabulated in table 19 and table 20

respectively. The decision for purchasing fabric quantity at different price levels is binded

to the cash availability, fabric storage capacity and demands due dates.

Table 16: fabric order quantity (FQfkt) solution for 64,128 MTO, MTS

FQf1t

1 2 3 4 5 6 7 8 9 10 11 12

0 0 0 0 0 0 0 30 30 0 0 0

41
 0 40 40 14 0 40 0 40 0 0 40 0

0 0 0 0 0 0 0 0 100 0 0 100

0 100 100 100 100 0 0 0 1 0 1 100

FQf2t

1 2 3 4 5 6 7 8 9 10 11 12

509756 0 0 0 0 0 0 0 0 0 0 0

378814 442 26 0 0 9 0 754 106891 0 7 128288

75208 0 0 0 0 0 0 0 0 0 0 226

47501 1158 0 11 5871 0 1459 46751 0 0 0 94

Table 17: fabric order quantity (FQfkt) solution for 32, 64 MTO, MTS

FQf1t

1 2 3 4 5 6 7 8 9 10 11 12

0 0 0 0 0 0 0 0 0 30 0 0

0 0 0 0 0 0 0 0 0 0 0 0

0 0 0 0 0 2 0 100 100 0 0 0

0 0 0 0 0 100 0 0 0 0 0 100

FQf2t

1 2 3 4 5 6 7 8 9 10 11 12

296956 0 0 0 0 0 0 0 0 1260 0 0

65636 57720 18152 5485 35945 52033 65575 0 0 0 0 0

20000 0 0 0 0 0 0 6122 2 0 0 8000

46450 0 0 0 0 0 0 0 0 0 0 100

42
Case 3: Case where the model chooses mainly MTO/MTS.

In order to enable the model to choose whether to produce MTO or MTS, constraint

number (5) was relaxed, thereby MTS was produced in the remaining capacity resulting

in high inventory levels as shown in table 10, which impacted the revenues; 1,345 EGP.

That is due to the limited initial cash and capacity constraints. Table 21, shows the

increasing inventory levels for the four MTS products and the cash flow in that case was

as illustrated in figure 4, the differences between the initial cash and the cash available

by the end of the planning horizon was 3,757 EGP which is considered very low profit

that cannot accommodate a following season production plan.

Table 18: MTS inventory levels when eqn. (5) is relaxed.

Periods MTS1 MTS2 MTS3 MTS4

1 0 0 200 0
2 0 0 200 400
3 0 0 500 400
4 0 0 500 538
5 400 200 1100 538
6 650 300 1100 538
7 654 500 1300 538
8 654 800 1300 538
9 654 800 1300 538
10 1154 800 1300 538
11 1154 800 1300 538
12 1154 800 1300 538

43
 cash flow for case 3
300000

250000

200000

150000
amount (EGP)
100000

50000

0
1 2 3 4 5 6 7 8 9 10 11 12

Figure 7: cash flow/period for case 3

Chapter 5 Computational Results and Sensitivity Analysis

The model behavior was tested by changing influential parameters and checking the

response of the costs and revenues towards those changes. The chosen parameters were

the parameters that were known in the industry to be subjected to changes or

uncertainties.

The parameters, in which their values were changed and tested, are the percent of

capacity occupied by MTO and MTS alternatively, fabric price changeability, the

inventory holding costs and finally the subcontracting cost.

5.1 Impact of changing percent occupied by MTO and MTS on the revenues. Since

for the base case, the percent of capacity occupied by MTO was 70 % and 30% for the

MTS production, then it was important to investigate the model sensitivity towards

44
varying percentages, when distributed alternatively between MTO and MTS. Table 23.

shows the different percentages tested and the corresponding gained revenues.

Table 19: Capacity distributed between MTO, MTS, and their projected revenues

Percent of capacity
occupied by
MTO/MTS production net profits MTO Rev. MTS Rev.

MTO MTS
70 30 153,227 1,433,100 559,000
60 40 294,263 1,240,000 793,000
50 50 478,107 1,030,000 1,200,000
40 60 509,472 827,000 1,240,000

Increasing the percent of capacity for MTS, the total revenues showed an increasing

pattern while the MTO revenue falls back as shown in figure 4. Although the revenues

attained in the graph makes sense, but that is not very accurate if the forecasted demands

were not fully sold as planned. On the other hand, the MTO shows a higher revenue

contribution when it occupied 40% of the capacity in contrary to the MTS when it

occupied 40% of the capacity. Moreover, analyzing the 70-30 percent alternatively

between MTO and MTS, when the former (MTO) occupied the higher percent,

significant revenues were depicted unlike the MTS, the model has reported infeasibility.

That was due to several things, the MTS production volumes are mainly restricted to the

cash availability, in which the MTO revenues contributes in it but on the other hand the

MTO production and fabric costs are also much higher.

45
 1600000
1400000
1200000
1000000
800000 Profits

600000 MTO revenues

MTS revenues
400000
200000
0
70-30 60-40 50-50 40-60
Percent of capacity consumed by MTO -MTS

Figure 8: Percent of capacity consumed by MTO-MTS vs. revenues

The closer the percentage between the MTO and MTS capacity, while giving the MTO

the higher percent, the more the revenues acquired.

Therefore, the most suitable percentages division would be 60-40 or 50-50 for allocating

capacity to MTO- MTS respectively.

5.2 Impact of distributing capacity between MTO and MTS on the costs.

The results for the costs encountered from MTO & MTS production during regular,

overtime and subcontracting show how the costs are sensitive to different production

volumes for MTO and MTS as shown in table 24.

Table 20: Production costs (EGP) vs. percentage of capacity

MTO % MTS % MTO MTS Subcontracting Total costs
Production cost Production cost
cost
70 30 658440 1.88E+05 54225 1838618
60 40 564363 2.49E+05 73050 1739645
50 50 452229 3.69E+05 88425 1752849

46
 40 60 350631 3.77E+05 82125 1555890

Figure 9 exhibits how the MTO production costs are high even if it occupies smaller

percent of the capacity. The subcontracting cost for the 50-50 and 40-60 percent were

apparently close with a difference of 7% and the total costs for the same percentages were

nearly the same. While when the MTS amounts exceeded that for the MTO; the 40-60

case; the total costs indeed decreased. However, when the MTS costs for the 40-60 and

50-50 case were compared, the difference in their costs will be just 0.2%.
2000000
1800000
1600000 fabric inv. costs
1400000 fabric costs
1200000
MTS inv. costs
1000000
MTO inv. costs
800000
subcontracting costs
600000
MTS prod. costs
400000
200000 MTO prod. costs
0
70-30 60-40 50-50 40-60

Figure 9: percentage of capacity consumed vs. costs

5.3 Impact of changing percent of capacity between MTO and MTS on the inventory
holding costs.

MTS, as the term implies, has higher inventory costs than that for MTO, table 25. As the

percent of capacity allocated for MTS increase the MTS inventory holding cost increases

notably as shown from the results in figure 5, except for the 70-30 %, the MTO had a

47
higher inventory, because it comprises higher percentage and there is enough storage area

to store finished MTO products to meet its due date.

Table 21: Percentage of capacity distributed between MTO and MTS vs. Inv. holding cost
MTO % MTS % MTO Inv. cost MTS Inv. cost
70 30 1785 216
60 40 1207 1433
50 50 1664 2237
40 60 648 4949

6000

5000

4000

3000
MTO inv. cost
2000 MTS inv costs

1000

0
70-30 60-40 50-50 40-60
Percentages of capacity consumed vs the inv. holding cost

Figure 10: Percentage of capacity distributed between MTO and MTS vs. inventory holding cost

5.4 Impact of increasing fabric price on the profits.

Fabric price is a substantial parameter of the model. Thus measuring its implications on

the revenues and inventory cost was vital. Table 26, demonstrates the revenues and

inventory holding costs obtained for every percent increase in the fabric price.

Table 22: Fabric price percentage increase vs. profits and fabric inventory cost
Fabric price percent Profits Fabric inventory cost
increase
Base 153,226 26,921

48
 5% 100,095 30,863
10% 61,509 36,353
15% 9,025 39,298
20% -45,082 41,453
25% -94,189 42,481

The profits were very sensitive to the fabric price increase as shown in figure 6; it showed

a decreasing pattern for every percent increase in the fabric price, which almost decayed,

and no revenues were realized when it increased by a percent more than 15 %. On the

contrary, to the fabric inventory cost that moved in an increasing fashion; which was

expected; as it is purchased and stored for the sake of the objective function optimality.

200000

150000

100000

50000
net profits
0 Fabric inventory cost
base 5% 10% 15% 20% 25%
-50000

-100000

-150000
Fabric price percent increase

Figure 11: Fabric price percentage increase vs. revenues

5.5 Impact of increasing the inventory holding cost on the revenues.

Table 27, shows the impact of increasing the inventory holding cost for MTO, MTS and

fabrics on their costs and the revenues. The fabric inventory cost showed the higher

holding cost then the MTO and the least was the MTS inventory. That is consistent with

49
the data for fabric amounts for the MTO products. Since one garment of a MTO product

consumes 3 meters of fabrics unlike the MTS items, one garment of it never reach this

number. Given that the MTO production to MTS production is 70 to 30, then the amounts

purchased for MTO will be much higher.

Table 23: Profits and costs for inventory holding cost increase
Percent Profits MTO MTS MTO MTS Fabric
increase revenues inventory
revenues inventory inventory
costs
costs costs

Base 153226 1433100 558800 1785 216 26921

10% 129047 1433100 558800 23511 996 33369
15% 126466 1433100 558800 25684 1426 27222
20% 121670 1433100 558800 27971 1673 21826
25% 118418 1433100 558800 30654 1788 21294

Increasing the inventory holding cost by 10%, had a significant effect on the profits as it

decreased by 16%, while further increases in the inventory holding cost has decreased the

revenues in a range of 2 - 4% as indicated in table 22.

50
 180000
160000
140000
120000
profits
100000
MTO inv. costs
80000 MTS inv. costs
60000 fabric inv. costs
40000
20000
0
base 10% 15% 20% 25%

Figure 12: net profits vs. change in inventory holding cost

The net profits decreased as the inventory holding cost increased. The MTO inventory

cost and fabric inventory cost were both sensitive to the increase in the inventory holding

cost while the MTS weren’t significantly affected by that increase and that is because

here the MTS constituted only 30% of the capacity.

5.6 Impact of increasing subcontracting cost on the profits.

The model considers subcontracting for the MTO products; hence, testing its impact on

the revenues and related MTO production costs was meaningful. Table 28 displays the

outputs for the revenues, MTO production costs, overtime costs, subcontracting costs and

MTO inventory costs that are merged for every 5 percent increase in the subcontracting

cost.

Table 24: Revenues and costs vs. subcontracting cost percentage increase

51
 Percentage Profits MTO Overtime
Subcontracting MTO
increase Production production cost inventory
in the cost cost for cost

subcont- MTO and

racting MTS
cost

Base 153226 658440 1.02E+05 54225 1785

5% 148377 662058 1.06E+05 52182 1786
10% 142118 660892 1.06E+05 54858 1841
15% 135593 660915 1.06E+05 57448 1843

When the subcontracting cost increase the revenues decreased by around 4% for every

percent increase in the subcontracting cost. The MTO production cost was not

significantly affected by that increase; it was just elevated on an average of 0.2% and the

overtime production cost has remained almost unchanged. The inventory cost for MTO

increased by around 3% when the subcontracting cost increased from 5% to 10%.

Therefore, the revenues were sensitive to the changes in the subcontracting cost for the

percentages from 5 to 15 %, as presented in figure 13. A trial was made to test the

changes if the subcontracting cost increased by 20% but the solver took a long time to

solve (more than a day) to provide an optimum solution. So it was not included and for a

practical reason that this percent increase was considered an extreme and typically, the

subcontracting cost was not raised beyond the 10%, that is why the percentages tested

were enough.

52
 Profits
155000

150000

145000

140000

135000

130000

125000
base 5% 10% 15%

Figure 13: profits vs. subcontracting cost

Chapter 6 Conclusions and Future work

6.1 Concluding remarks

An MILP model for production and inventory planning of mixed MTO – MTS system for

a readymade garment industry, is proposed. The developed model showed the successful

approach of having a MTS production along with the MTO production stream, as a new

way for overcoming financial drawbacks and the repercussions of depending solely on the

MTO demands.

The optimum results attained from the developed model helped at making the right

decisions regarding the inventory and production for different products for a mixed MTO-

MTS products. The model considered the vital decisions encountered from the impact of

the production costs on the revenues.

The challenge faced at such environment was to guarantee the generation of a significant

revenue by the end of the season and positive cash flow at the end of each period. Thus, a

53
steady production process will take place without financial shortages. Cash inflow was

generated from the sales made by the MTS and the MTO items. The production plan

considered the main factors that influence the production process. The factors were the

fabric needed for production, the capacity limitations and the cash availability.

MTO due dates and forecasted demands were met for the planned products. Using the

spare capacity to produce to stock had a significant contribution in the revenues and

maintaining financial stability.

The model was very sensitive to the changes in the percentages of capacity allocation for

MTO and MTS to different cost parameters, while distributing the capacity 60 to 40

percent for MTO/ MTS products respectively proved to be the best option. For the given

MTO demands and target MTS, the tests on the percentage of MTS to be produced out of

the desired target production, has proved to present a positive cash towards the end of

each period and a significant revenue was realized.

Fabric price was a crucial parameter and the model was very sensitive to its changes,

which was anticipated, as the fabric price comprises 90% of the garment material cost.

Cash availability restricts the amounts to produce for MTS and affects the decision for

accepted orders. The results obtained helped at giving a practical guiding decisions that

improve a garment business significantly.

The effectiveness of the model was distinct in its simplicity and applicability to real life

garment production, as it considered the prominent inputs of the garment production

process. It has also tackled the vital and tangible decisions that happened to be of

significant impact on the decisions made.

54
The challenge has lied in having an optimum solution from merging the capacity and

production planning decisions with the finances in order to help a garment business to

sustain and grow. Therefore, a policy for production and capacity planning in garment

manufacturing was featured.

6.2 Insights on Future work:

1. Consider accounting for lost sales for a better forecast and consider backlogging

for MTO demands.

2. Merging an acceptance - rejection criteria for MTO demands.

3. Future work may also include examining the implications of the interest rate for

any given loan to the cash flow and the revenues.

4. Adding to the model procurement decisions related to the fabric that may include

supplier selection, supplier lead-time effect, and supplier terms of discounts.

55
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60
 Appendix A: The inputs for multiples of MTO – MTS products
For multiple of products, Table A1 indicates the input capacities for 64 MTO and 128
MTS products. The distribution of the demands over the periods were distributed
arbitrarily.
Table A1: Input capacities for the 64, 128 MTO - MTS products
Capacities available per period

Regular Capacity Hmax 41600

Overtime Capacity G max 10560

Storage capacity for Final products Vmax 12000

Storage capacity for fabrics Wmax 2400

Table A2 represents the input costs used for the 64 MTO and 128 MTS products.

Table A2: Input parameters for 64-128 MTO - MTS

Input parameter MTO MTS
𝑰𝑪𝑶𝒎𝒕 0.18 -
𝑰𝑪𝑺𝒋𝒕 - 0.17
50 -
𝑹𝑪𝑺𝒋 - 30
𝑶𝑪𝑶𝒎 75 -
- 45
75 -
𝒉𝑶 𝒎 1.3
- 1
0.4 -
- 0.2
50 -
𝑩𝑺𝒋 - 50

A1
 Table A3: Input price for 64 - 128 MTO - MTS
MTO product Price (EGP) MTS product Price (EGP)
MTO product 1 170 MTS product 1 200
MTO product 2 110 MTS product 2 90
MTO product 3 90 MTS product 3 90
MTO product 4 90 MTS product 4 100
MTO product 5 80 MTS product 5 60
MTO product 6 80 MTS product 6 70
MTO product 7 170 MTS product 7 80
MTO product 8 110 MTS product 8 90
MTO product 9 90 MTS product 9 100
MTO product 10 90 MTS product 10 90
MTO product 11 80 MTS product 11 90
MTO product 12 80 MTS product 12 100
MTO product 13 170 MTS product 13 60
MTO product 14 110 MTS product 14 70
MTO product 15 90 MTS product 15 80
MTO product 16 90 MTS product 16 90
MTO product 17 80 MTS product 17 200
MTO product 18 80 MTS product 18 90
MTO product 19 170 MTS product 19 90
MTO product 20 110 MTS product 20 100
MTO product 21 90 MTS product 21 60
MTO product 22 90 MTS product 22 70
MTO product 23 80 MTS product 23 80
MTO product 24 80 MTS product 24 90
MTO product 25 170 MTS product 25 100
MTO product 26 110 MTS product 26 90
MTO product 27 90 MTS product 27 90
MTO product 28 90 MTS product 28 100
MTO product 29 80 MTS product 29 60
MTO product 30 80 MTS product 30 70
MTO product 31 170 MTS product 31 80
MTO product 32 110 MTS product 32 90
MTO product 33 90 MTS product 33 200
MTO product 34 90 MTS product 34 90
MTO product 35 80 MTS product 35 90
MTO product 36 80 MTS product 36 100
MTO product 37 170 MTS product 37 60
A1

MTO product 38 110 MTS product 38 70

MTO product 39 90 MTS product 39 80
MTO product 40 90 MTS product 40 90
MTO product 41 80 MTS product 41 100
MTO product 42 80 MTS product 42 90
MTO product 43 170 MTS product 43 90
MTO product 44 110 MTS product 44 100
MTO product 45 90 MTS product 45 60
MTO product 46 90 MTS product 46 70
MTO product 47 80 MTS product 47 80
MTO product 48 80 MTS product 48 90
MTO product 49 170 MTS product 49 200
MTO product 50 110 MTS product 50 90
MTO product 51 90 MTS product 51 90
MTO product 52 90 MTS product 52 100
MTO product 53 80 MTS product 53 60
MTO product 54 80 MTS product 54 70
MTO product 55 170 MTS product 55 80
MTO product 56 110 MTS product 56 90
MTO product 57 90 MTS product 57 100
MTO product 58 90 MTS product 58 90
MTO product 59 80 MTS product 59 90
MTO product 60 80 MTS product 60 100
MTO product 61 170 MTS product 61 60
MTO product 62 110 MTS product 62 70
MTO product 63 90 MTS product 63 80
MTO product 64 90 MTS product 64 90
MTS product 65 200
MTS product 66 90
MTS product 67 90
MTS product 68 100
MTS product 69 60
MTS product 70 70
MTS product 71 80
MTS product 72 90
MTS product 73 100
MTS product 74 90
MTS product 75 90
MTS product 76 100
MTS product 77 60
MTS product 78 70

C
MTS product 79 80
MTS product 80 90
MTS product 81 200
MTS product 82 90
MTS product 83 90
MTS product 84 100
MTS product 85 60
MTS product 86 70
MTS product 87 80
MTS product 88 90
MTS product 89 100
MTS product 90 90
MTS product 91 90
MTS product 92 100
MTS product 93 60
MTS product 94 70
MTS product 95 80
MTS product 96 90
MTS product 97 200
MTS product 98 90
MTS product 99 90
MTS product 100 100
MTS product 101 60
MTS product 102 70
MTS product 103 80
MTS product 104 90
MTS product 105 100
MTS product 106 90
MTS product 107 90
MTS product 108 100
MTS product 109 60
MTS product 110 70
MTS product 111 80
MTS product 112 90
MTS product 113 200
MTS product 114 90
MTS product 115 90
MTS product 116 100
MTS product 117 60
MTS product 118 70

D
 MTS product 119 80
MTS product 120 90
MTS product 121 100
MTS product 122 90
MTS product 123 90
MTS product 124 100
MTS product 125 60
MTS product 126 70
MTS product 127 80
MTS product 128 90

Appendix B: The outputs for multiple of multiple MTO – MTS products

This appendix includes the outputs for 64 MTO products and 128 MTS products.
Table B1: Fabric inventory for multiple MTO – MTS products
Periods Fabric 1 Fabric 2 Fabric 3 Fabric 4
1 492917 311314 67742 36277

E
 2 436256 303177 57342 20725
3 436256 223560 53942 5992
4 330191 223574 48432 3303
5 306290 137660 43808 7242
6 253610 100218 29614 1808
7 245936 0 27814 0
8 149993 644 20612 40751
9 142169 50367 17712 26252
10 89813 32223 7712 13002
11 89600 863 0 3537
12 599 129151 0 0

Table B2: MTO optimum production and inventory plan

Demand, Regular Overtime subcontracting Inventory
MTO
period
product t amount t amount t amount t amount
(t)
5000,1 1 1 5000
5000,2 2 2 5000
5000,3 3 3 5000
5000,4 4 4 5000
5000,5 5 5 5000
3855, 3855,
5000,6 4, 5
6 4, 6 1093 6 52 3855
266,
5000,7 6 266
7 6, 7 4734
381, 381, 381
5000,8 6, 7
8 6, 8 3151 8 1468
7-8, 5022,
5000,9
9 7 5022 911 22
5000,10 10 10 5000
9, 9, 10, 65, 647,
5000,11
11 11 65, 4375 10 582 11-12 22
5000,12 12 12 8231 12 3231
5000,1 13 1 5000

5000,2 14 2 5000
2818,
5000,3
15 2,3 138 3 2044 2 2818
5000,4 16 4 521 4 4479
5000,5 17 5 5000
5000,6 18 5, 6 4917, 33 6 50 5 4917

F
5000,7 19 7 5000
5000,8 20 8 5000
2733,
6, 6,7-8,
3000,9 2733, 2993,
7, 9 9-12
21 260, 51 44
9,
3000,10 9 68
22 10 17, 2932 9 51
9,
3000,11 9, 10 2940
23 11 2940, 60
11,
3000,12 11, 12 71, 7
24 12 14, 2936 11 57
3000,1 25 1 3000
3000,2 26 1 2998 1 2 1 3000
3000,3 27 3 3000
3000,4 28 4 3000
3000,5 29 5 3000
3000,6 30 5 3000 5 3000
2-4, 56
2500,7 55, 109
31 2, 7 55, 2391 5 54
2500,8 32 7 2500 8 1 9 2500
2500,9 33 7 2499 9 1 10 2500
2500,10 34 9 2500
2500,11 35 10 2500
2500,12 36 12 2500
2500,1 37 1 2500
2500,2 38 1 2500 1 2500
2500,3 39 3 379 2 2121 2 2121
2500,4 40 4 2500
7000,5 41 5 670 5 6330
6,7….
1
7000,6 42 6 7001 12
7000,7 43 7 6999 5 1 5,6 1
7000,8 44 8 7000
7000,9 45 9 7000
7000,10 46 10 7000
6-7, 8-
6999,70
7000,11 47 6, 8 6999, 50 10,11-
49,49
12
7000,12 48 12 7000
7000,1 49 0 1 7001 1 …12 1
7000,2 50 2 7000
9000,3 51 3 9000
9000,4 52 4 9000

G
 9000,5 53 5 8584 5 416
9000,6 54 5, 6 1, 2417 5, 6 49, 6533 5 50
9000,7 55 7 9000
9000,8 56 8 8942 7 58 7 58
9000,9 57 9 9000
8,
6430,
9, 6430, 8, 9
6480
9000,10 58 10 50, 2520
10, 2966,
10 2966
9000,11 59 11 6034
9000,12 60 12 9000
7000,1 61 1 7000
112,
1 113
7000,2 62 1, 2 6887 1 1
7000,3 63 3 6999 3 1
7000,4 64 4 7000

Table B3: MTS production plan for multiple of products

Regular Overtime Inventory
MTO amou
Forecast, period product period nt period amount period amount
712,28
1000, 4 1 2,4 0 2,3 712, 712
8
1000, 4 2 2 1000 0 2, 3 1000, 1000
1000, 4 3 0 4 1000 0
1000, 4 4 3 1000 0 3 1000
833,16 833, 833, 833
1000, 4 5 1,4 0 2,3,4
7
1000, 4 6 2 1,000 0 2, 3 1000, 1000
1000, 4 7 4 1000 0
1000, 4 8 3 1000 3 1000, 1000
600, 1 9 1 600 0 0
600, 1 10 1 600 0 0
600, 1 11 1 600 0 0
600, 1 12 0 1 600 0
600, 1 13 1 244 1 356 0
600, 1 14 1 600 0 0
600, 1 15 1 600 0 0

600, 1 16 0 0 0
2000,3 17 0 10 2000 10, 11 2000, 2000
2000,3 18 12 2000 0 0

H
2000,3 19 10 2000 0 10,11 2000, 2000
2000,3 20 0 11 2197 11, 12 2197, 197
2000,3 21 0 8 2000 8,9..12 2000
2000,3 22 11 2000 0 11 2000
2000,3 23 0 0 0
2000,3 24 11 2000 0 11 2000
900,3 25 2 900 0 2 900
900,3 26 0 3 900 0
900,3 27 0 3 900 0
900,3 28 0 3 900 0
900,3 29 2 900 0 2 900
900,3 30 0 3 900 0
900,3 31 2 900 0 2 900
900,3 32 3 900 0 0
700,2 33 0 1 700 1 700
700,2 34 0 1 700 1 700
700,2 35 2 700 0 0
700,2 36 0 700 1 700
700,2 37 2 700 0 0
700,2 38 2 700 0 0
700,2 39 1 700 0 1 700
700,2 40 2 700 0 0
1499, 6-7, 8-9, 1499, 1549,
1500, 10 41 6, 8 0
50 10-12 49
1500, 10 42 0 8 1500 8,9 1500, 1500
1500, 10 43 10 1500 10 1500 0
1500, 10 44 0 0 8,9 1500, 1500
1500, 10 45 0 0 0
1500, 10 46 8 1500 0 8,9 1500, 1500
1500, 10 47 9 1500 0 9 1500
1500, 10 48 9 1500 0 9 1500
700,3 49 2 700 0 2 700
700,4 50 2 700 0 2 700
700,5 51 2 700 0 2 700
700,6 52 2 700 0 2 700
700,7 53 3 700 0 0
700,8 54 2 700 0 2 700
700,9 55 1 700 0 1,2 700,700
700,10 56 1 700 0 1,2 700,700

1100, 6 57 6 1100 0 0

I
1100, 6 58 2 1100 0 2,3..5 1100
1100, 6 59 2 1100 0 2,3..5 1100
1100, 6 60 1 674 2 426 1, 2-5 674, 1100
1100, 6 61 6 1100 0 0
1100, 6 62 1 1100 0 1,2..5 1100
1100, 6 63 0 2, 5 212, 888 2-4,5 212, 1100
1100, 6 64 5 66 6 1034 5 66
1500, 10 65 10 1500 0 0
1500, 10 66 10 1500 0 0
1500, 10 67 10 1500 0 0
1500, 10 68 0 10 1500 0
1498, 6-7,8- 1498, 1549,
1500, 10 69 6, 8 0
51 9,10-12 49
1500, 10 70 10 1500 0 0
1500, 10 71 9 1500 0 9 1500
1500, 10 72 10 1500 0 0
1000, 3 73 1 1000 0 1,2 1000, 1000
1000, 3 74 3 1000 0 0
1000, 3 75 0 3 1000 0
1000, 3 76 3 1000 0 0
1000, 3 77 2 1000 0 2 1000
1000, 3 78 3 1000 0 0
1000, 3 79 2 1000 0 2 1000
1000, 3 80 1 1000 0 1,2 1000, 1000
1000, 4 81 3 1000 0 3 1000
1000, 4 82 3 1000 0 3 1000
1000, 4 83 2 1000 0 2, 3 1000, 1000
1000, 1000,
1000, 4 84 1 1000 0 1,2,3
1000
1000, 4 85 4 1000 0 0
1000, 1000,
1000, 4 86 0 1 1000 1, 2, 3 1000
1000, 4 87 0 3 1000 3 1000
1000, 4 88 0 2 1000 2, 3 1000, 1000
1300, 5 89 5 1300 0 0
1300, 1300,
1300, 5 90 2 1300 2, 3, 4 1300
1300, 1300,
1300, 5 91 2 1300 0 2, 3, 4 1300
1300, 1300,
1300, 5 92 2 1300 0 2, 3, 4 1300
288, 288, 288, 288
1300, 5 93 2, 5 1010 5 2 2, 3, 5

J
1300, 5 94 3 1300 0 3,4 1300, 1300
1300, 5 95 0 3 1300 3,4 1300, 1300
1300, 5 96 0 5 1300 0
1300, 6 97 0 4 1300 4, 5 1300, 1300
1300, 6 98 0 4 1300 4, 5 1300, 1300
1300, 6 99 5 1000 0
1300, 6 100 5 1000 0
1300, 6 101 5 1000 0
1300, 6 102 5 1000 0
1300, 6 103 5 1000 0
1300, 6 104 0 2 1000 2,3…5 1000
900, 7 105 0 6 900 6 900
900, 7 106 0 7 900 0
900, 7 107 0 7 900 0
783,
900, 7 108 3, 7 0 3,4…6 783
117
900, 7 109 7 900 0 0
900, 7 110 0 7 900 0
900, 7 111 0 7 900 0
900, 7 112 6 900 0 6 900
2000, 12 113 11 2019 0 11, 12 2019, 19
2000, 11 114 10 2000 0 10 2000
2000, 10 115 10 2000 0 0
2000, 11 116 9 2000 0 9, 10 2000, 2000
2000, 12 117 12 163 11 1837 11 1837
2000, 11 118 9 2000 0 9, 10 2000, 2000
2000, 12 119 12 308 11 1692 11 1692
2000, 11 120 0 11 2000 0
1500,9 121 0 8 1500 8 1500
1500,9 122 0 9 1500 0
1500,9 123 0 9 1500 0
1500,9 124 0 9 1500 0
1500,9 125 9 1500 0 0
1500,9 126 9 1500 0 0
1500,9 127 9 1500 0 0
1500,9 128 0 8 1500 8 1500

K
Appendix C: Fabric inventory and quantity purchased for the 32 – 64
MTO – MTS
Table C1: fabric inventory for 32-64 MTO - MTS
IFft

1 2 3 4 5 6 7 8 9 10 11 12
287599 244456 233956 160471 145381 103849 100762 43306 22960 24250 250 250
1151 39494 24544 21029 1369 17849 1686 0 0 0 0 0
17600 11600 4400 4400 0 2 2 5898 0 0 0 0
43150 37200 24350 23350 22250 19050 19050 18796 18540 2000 0

Table C2: Fabric purchased at price level k=1

FQf1t

1 2 3 4 5 6 7 8 9 10 11 12
0 0 0 0 0 0 0 0 0 30 0 0
0 0 0 0 0 0 0 0 0
0 0 0 0 0 2 0 100 100 0 0 0
0 0 0 0 0 100 0 0 0 0 0 100

Table C3: Fabric purchased at price level k=2

FQf2t

1 2 3 4 5 6 7 8 9 10 11 12
296956 0 0 0 0 0 0 0 0 1260 0 0
65636 57720 18152 5485 35945 52033 65575 0 0 0 0 0
20000 0 0 0 0 0 0 6122 2 0 0 8000
46450 0 0 0 0 0 0 0 0 0 0 100

A1