Lean Manufacturing Principles: A Comprehensive Framework for Improving Production Efficiency

Where the subscript X refers to position in the chain, and the superscript t refers
to the week. So, the IO as a function of the length of the chain can be found by iterating the above expression for X = 1 to n where n is the length of the LDS chain. Many factories attempt to avoid the spikes caused by variation in customer demand by “forecasting” future demand. If the forecaster sees an increase in downstream demand he will order raw materials for the incoming order plus an additional quantity, knowing that it will take five weeks (the OLT) to receive the order from the supplier, and wanting to have plenty of raw materials should demand continue to rise. Similarly, the forecaster may also order less raw materials from the supplier than the incoming order,
following a decrease in customer demand. The effect of this “forecasting” on system response can be seen by setting the forecaster factor equal to 0.1. This is equivalent to a forecaster who orders raw materials equal to the order plus 10% of the difference between this weeks order and last weeks order. The resulting response of the system to a 20% impulse input (compare with Figure 2.14a and Figure 2.14b) is shown in Figures 2.16a and 2.16b.