Spring 2002

ME/IE 8773-8774

SEMI-FINISHED PRODUCT DESIGN AND INVENTORY DEPLOYMENT
TO IMPROVE DELIVERY PERFORMANCE OF INTEGRATED STEEL MILLS

by

Diwakar Gupta, Ph.D.
Associate Professor
Industrial Engineering Division
Department of Mechanical Engineering
University of Minnesota

Wednesday, March 7, 2001
3:30-4:30 p.m.
Room 108 ME
Broadcast on UNITE Channel A
Coffee and cookies will be available in 152 ME following the seminar

Integrated steel mills (ISMs) produce a wide range of finished products, most commonly in the form of flat-rolled steel coils. Global excess of steel-making capacity resulting from the emergence of mini-mills has created intense competition in the plain carbon steel markets in recent years. As a result, it is increasingly important that ISM's differentiate themselves from competitors based on product features and customer service. Unfortunately, rapidly changing and expanding product portfolios lead to increased inventory and generally make service performance worse.

Two key attributes of customer service are the duration and the reliability of order-fulfillment time. To improve service ISM's are shifting from a pure make-to-order system toward a hybrid make-to-stock, make-to-order system. As most ISMs make customized products, it is neither feasible nor economical to stock a full array of finished products. However, significant lead time improvements can be achieved by carrying semi-finished inventory at various staging points in the ISM's supply chain. Important questions arise as to which semi-finished product designs should be made to stock, and how should their inventory be managed. We present a model for choosing the design of semi-finished products to stock, and discuss details of its implementation at a particular ISM. Numerical examples based on empirical data are presented, and managerial implications are summarized. We also describe on-going work in building models for setting target inventory levels for intermediate products like slabs.

Diwakar Gupta is an Associate Professor in the Department of Mechanical Engineering at the University of Minnesota. Prior to joining University of Minnesota, Diwakar Gupta has held Faculty appointment at McMaster University and at the Technical University of Nova Scotia. His research interests are in the areas of manufacturing and supply chain management, with an emphasis on stochastic modeling. His articles have appeared in journals such as Operations Research, Management Science, IIE Transactions, Queueing Systems Journal, Operations Research Letters, and European Journal of Operational Research. Diwakar Gupta is an associate editor at the International Journal of Flexible Manufacturing Systems.

Informal Faculty Luncheon: Wednesday, March 7, 2001, 12:00 noon. A table is reserved at McCormick's Restaurant, Radisson Hotel Metrodome. Prof. Gupta will not be able to attend.