Managing complexity of product mix and production flow in configure-to-order production systems

In designing configure-to-order production systems for a growing product variety, companies are challenged with an increased complexity for obtaining high productivity levels and cost-effectiveness. In academia several optimization methods and conceptual frameworks for substituting components, or increasing lot sizes and storage capacity have been proposed. Our study presents a practical framework for quantifying the impact of a two-way substitution at different production stages and its impact on storage and machinery utilization. In a case study we quantify the relation between substitution, lot sizing and capacity utilization, while maintaining the production capacity as well as the external product variety.