Optimal work order release for make-to-order job shops with customer order lead-time costs, tardiness costs and work-in-process costs

Work order release mainly has been studied with regard to its impact on throughput, throughput time and work-in-process. In this research, we investigate work order release from an economic perspective. We study the situations where there are costs associated with the length of the customer order lead-time, the order tardiness and the work-in-process on the shop floor. Our research aims at minimizing the sum of these three costs. We derive expressions for the optimal value for the maximum number of orders that is allowed to be in process. Numerical analysis of a job shop model is used to investigate the reduction in total costs that results from optimally controlling the work-in-process as compared to the total costs under immediate release of arriving orders. The results show that cost reductions can be substantial for small shops, and for high ratios of work-in-process costs to lead-time costs.