Optimized Production Control Policy for Hybrid MTS-MTO Glass Tube Manufacturing Using Simulation-Based Optimization

The declining demand for fluorescent lamps, along with a recent currency floatation, forced a major glass tube manufacturer in Egypt to adopt a mixed Make-to-Stock (MTS) - Make-to-Order (MTO) strategy. In this research, a production control policy is proposed to effectively guide the involved product-mix decisions towards reducing the total cost. A simulation model is developed which is divided into three interconnected modules, namely decision, production, and order fulfillment. Along with the simulation model, a randomized search algorithm is applied to find appropriate values for the control variables of the proposed policy. Results provide evidence for the effectiveness of the proposed production control policy in reducing the total cost. Sensitivity analyses are conducted to investigate the effects of raw material and energy prices on the production parameters and the control variables of the proposed policy. It is found that the increase in raw material prices influences the production parameters; however, it does not affect the control variables of the proposed policy. On the other hand, the increase in energy prices influences both.