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Any product that is sold or used somewhat repeatedly is a candidate for rate-based production, which means scheduling the same quantity at regular intervals (see, for example [2]). Rate-based production is also referred to as leveled or "levelized" production, which is a less precise term that could mean level as to capacity but consisting of an uneven mixture of products, quantities, and intervals.
Scheduling to a rate simplifies planning and tightly synchronizes multi-stage production. The rate may cascade down through several bill-of-material levels, thus unifying the schedules of components and parent items. The quantity and interval can range from thousands per hour or per day (e.g., a certain model of inoculation syringe at Becton Dickinson) to one every few days or weeks (e.g., a Boeing 737 airplane).
BACKING AWAY FROM BATCHES
A rate-based system replaces the usual pattern of irregular batches and work orders. Conventionally, each batch is separately planned, scheduled, and controlled, which usually requires dozens of computer transactions including assigning labor, tooling, and equipment; collecting costs; and accounting for workin-process handling and storage. The irregularity of batching passes backward through component and purchasing stages and forward through distribution channels. This generates costly yo-yo demands on capacity at each stage of the supply and customer chains.
Converting to a rate reduces administrative overheads and quiets demands on capacity. It can become as simple as issuing a single work order per month, expressed as a quantity per day; then, during the month, instead of transactions, production associates work off a fixed package of planning documents and capacity elements situated at the work sites. While the conventional system is usually driven by an uneven master schedule and material requirements planning (MRP)-generated work orders, the rate-based system can be run manually or off a simple PC routine. However, today's MRP systems often allow the option of running either to work orders or to a stable rate. This option may apply to a single component or to a group of related components spanning several stages of a product structure. The benefits of rate-based production are summarized in the following scenario in the form of a hypothetical conversation between an advocate and a reluctant plant manager.
BUT OUR GOAL IS MAKE-TO-ORDER
Advocate: Do you have any parts on...