A generalized approach to demand buffering and production levelling for JIT make-to-stock applications

Heijunka is a Just-In-Time scheduling technique that strives to level variety and/or volume over a fixed period in order to maintain low inventories and to avoid excessive batching of product types and/or volume fluctuations. Businesses that use heijunka scheduling and immediately fulfill customer orders upon receipt require a finished goods inventory to service that demand. This inventory must be appropriately sized to adequately balance the customers' variable demand against the level production rate from manufacturing. However, even producing for long periods of time at the true mean demand rate will not guarantee low inventories due to the random walk nature by which inventories are unavoidably generated. The production process must be willing and able to flex their production to eliminate this random walk. This paper develops the simple production control law that will allow manufacturing to reliably operate their JIT heijunka process. It determines the trade offs that must be made between: the time between fixed production rate changes (N), the finished goods inventory needed to provide a user specified level of backorders, and the flex needed in production capacity to guarantee that the process will continue to function effectively.