A goal programming approach to lean production system implementation

Companies use different production policies to ensure customer demands are satisfied in time. To track the performance of production policies some important Key Performance Indicators related to production control and management are On-Time Delivery (OTD), machine or line productivity (OEE – Overall Equipment Efficiency), optimization of inventory levels between workstations (WIP), customer satisfaction i.e. prioritization of customer orders according to requirements of the customer, and backlog minimization. In this study, a real-life production management problem is described, modelled, and solved to improve customer delivery rate and, to plan manufacturing orders using lean production tools. Currently, the Make-to-Stock policy is used for semi-finished materials. The problems encountered are low customer service level, high level of WIP between operations and efficiency losses. Therefore, the goal of this study is to increase efficiency (OTD, OEE, and customer satisfaction) by minimizing setup time, decreasing WIP by minimizing earliness, backlog quantity level and improving service level by minimizing lateness of orders. Since these goals contradict each other, we propose a multi-objective mathematical formulation with a setup carryover strategy. Then we formulate a Goal Programming (GP) model and solve it by using different GP variants and the normalization method. Finally, we discuss numerical results and provide our final remarks and conclusions.