The Impact of Planning Granularity on Production Planning and Control Strategies in MTO: A Discrete Event Simulation Study

Production Planning and Control strategies have gained increasing importance in order to stay competitive by enhancing the ability to meet and quickly adapt to the requirements of highly volatile markets. In this context, traditional approaches like Material Requirements Planning often lead to long lead-times and high Work In Progress due to weak responsiveness to fluctuations in demand. New strategies and concepts in the era of Industry 4.0, like real-time data, have the potential to improve traditional approaches. The paper evaluates the impact of different levels of planning granularity of various Production Planning and Control strategies to improve the logistics performance in a Make-to-Order production system. The effects of a monthly, a two-week and a weekly planning horizon are evaluated according to a Material Requirement Planning, KANBAN and Constant Work In Progress strategy. The approach is validated by using a Discrete Event Simulation based on data from an electronics manufacturing company working in the Make to Order environment.