BUS606: Operations and Supply Chain Management

An overall analysis of Sect. 5's results shows that the performance of buffer allocation patterns is highly dependent on the configuration of the system. The ascending unbalanced buffer allocation pattern (/) led to better TR performance with shorter, more unreliable lines; whereas the balanced pattern attained better TR performance when longer, more reliable lines were considered. These results suggest that different degrees of unreliability do influence which particular pattern is the best-performing, as question (1) of the study postulated.

Concerning ABL, the system's configuration did not influence the best-performing pattern. The ascending pattern was found to be the best pattern for all scenarios and the descending pattern was found to be the worst pattern for almost all scenarios.

In contrast, the effect of buffer allocation patterns on ABL was found to be much higher on reliable lines than on unreliable lines, showing a higher effect in shorter lines than in longer lines (see the comparison between Fig. 3a, c). Results from the Analysis of Variance test (Table 2) show that, overall, buffer capacity and buffer allocation pattern are the most important factors in the resulting ABL. Interaction effects such as buffer allocation pattern with reliability and length ($BP:N:\varepsilon$) were also found to be statistically significant.

Thus, addressing question (2) of the study, results suggest that the relative impact of buffer allocation patterns for TR is low when compared with the impact of reliability, but is moderately high for ABL, since a good or bad pattern will significantly affect the average buffer content of a merging line. It was also found that all of the experimental factors considered in this study are statistically significant, confirming the results of previous studies regarding the effect of $N, BC, ε, α$ and $BP$ on TR.

Section 6 presents very interesting results on the impact of inventory holding costs and buffer capacity investment/maintenance costs on the profit of different merging line configurations. In this regard, shorter merging lines with higher levels of machine unreliability and longer MTTF and MTTR were found to be particularly sensitive to inventory-related costs since the values of both $h_{\circ}$ and $i_{\circ}$ were commonly close to zero. These results answer question (3) and confirm that merging line characteristics influence the performance of merging lines when considering inventory-related costs. Shorter, highly unreliable lines with long MTTF and MTTR tended to achieve a higher profit performance with a smaller buffer capacity (due to the trade-off between additional buffer capacity costs and the additional TR generated by that capacity), and with buffer allocation patterns that reduced ABL (due to their comparatively high levels of average inventory content). Therefore, it can be reasonably concluded that increasing average buffer capacity per station from 2 to 6 in a merging line is more cost-effective for lines with a machine efficiency of 90.9%, shorter MTTF and MTTR, and longer lines than it is for lines with 70% machine efficiency, longer MTTF and MTTR, and shorter lines. Despite these results, reliable merging lines were found to benefit the least by increasing buffer capacity, for the majority of inventory-related values, as only for near-to-zero inventory-related costs did a buffer capacity of 6 produce higher profit than a buffer capacity of 2 (see Fig. 5g).

Regarding the impact of costs on buffer allocation patterns, the results of the current study agree with those of Hillier, who showed that buffer capacity should be significantly reduced and allocated towards the end of the line when inventory holding costs were high (e.g. $h = 0.1$). Thus, investing in additional buffer capacity to increase throughput seems to be subject to the "Law of diminishing returns", according to the more general "Theory of performance frontiers", since investment in extra buffer capacity is seemingly only effective when both inventory holding costs and buffer capacity investment/maintenance costs are quite low (see, e.g. Fig. 5).

Many of the results from the current study confirm and extend previous results which found that inventory holding costs had a higher impact on the profit function of unreliable lines than on the profit of reliable lines, but some results contrast with previous research by finding that reliable lines were more affected by buffer capacity investment/maintenance costs than unreliable lines. These results also contribute new understanding by showing that the profit function of lines possessing machines with longer MTTF and MTTR was more highly impacted by both inventory holding costs and buffer capacity investment/maintenance costs than was the profit of lines having machines with shorter MTTF and MTTR.

These results suggest that managers, working in industries which produce goods through merging lines (e.g. automotive, electronics, window and door factories with unreliable machines, stochastic processing times, and short line lengths, should consider unbalancing their buffers towards an ascending pattern. Furthermore, firms with high inventory-related costs, particularly those working in reliable machine industries, should be extremely careful when investing in additional buffer capacity, because the revenue gained through additional buffer capacity seldom covers the costs of obtaining that extra capacity. In practical terms, this means that industrial sectors with scarce inventory space (hence a high cost of expansion) and/or very high product value (hence higher inventory holding costs should conduct serious cost–benefit analyses when considering buffer capacity expansion and line design (i.e. buffer allocation), particularly in reliable environments.

Limitations of the study and future research

All methodologies have limitations, so conclusions from this study are only applicable to the simulated experimental points and care should be taken when generalising the results. Despite this, these results provide value in supporting a better understanding of the impact of unreliability and inventory-related costs on the performance of uneven buffer allocation patterns. More experimental points need to be explored in future research extensions, particularly regarding the average buffer capacity per station, to better understand the benefits of buffer capacity and average inventory levels on the performance of merging lines under different costs profiles.

The study's considerations on different machine efficiency values and various lengths of mean time to failure and to repair assumed a balanced allocation of these factors along the line, i.e. balanced unreliability. However, since it has been suggested that unreliability patterns have a significant effect on the performance of single serial lines, further research is needed to understand the influence of unreliability allocation on the performance of merging lines.