Positioning multiple decoupling points in a supply network

A decoupling point is the boundary between make-to-order (MTO) and make-to-stock (MTS). Many researchers have discussed the decoupling point in a serial supply chain. In reality, a product consists of many parts and components, and, consequently, their supplies form a supply network instead of a supply chain. This paper positions multiple decoupling points of a product in a complicated supply network instead of a supply chain. Based on the bill of materials (BOM) of a product, a mathematical model is developed in order to find the multi-decoupling points in the supply network through MTO and NITS integration, with the objective of minimizing the overall cost subject to satisfying customer delivery time. The results show that the hybrid strategy is better than a pure MTO or NITS strategy in a dynamic supply network and tight delivery deadline environment. Based on the mathematical model and its solution, the mutual impact between the multiple decoupling points in the supply network is investigated through sensitivity analysis. Finally, this paper makes multiple decoupling points more understandable. (C) 2008 Elsevier B.V. All rights reserved.