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Title: Seting optimal planned leadtimes in configure to order manufacturing systems.
We study the production planning in Configure To Order (CTO) manufacturing systems. The system consists of multiple stages that converge to one final assembly stage. Leadtimes per stage are stochastic due to extensive testing at the end of each stage.
Our goal is to determine optimal planned leadtimes for each stage such that the total expected production costs are minimized. We derive Newsvendor equations for each individual stage. This set of equations is solved and the exact optimal planned leadtimes for each stage are obtained. These equations also give an important insight in the dynamics of the system, since they indicate to what extend a specific stage can be blamed for the lateness of the final product.