Measuring the cost of individual disruptions in multistage manufacturing systems

A Multistage Manufacturing System (MMS), in which interconnected workstations fabricate products, plays an important role in modern manufacturing facilities. An MMS is subject to random disruptions originating at individual workstations. Understanding the cost of individual disruptions is critical for executional cost management at the plant-floor level. However, the interdependence of the workstations makes it challenging to measure the cost of individual disruptions. One disruption might stop another workstation and cause a system shutdown, while inventory buffers might compensate for another disruption, which will then have no impact on system output. We propose a four-step procedure to measure the cost of individual disruptions and conduct a simulation study using field data from an automobile assembly line. The results show that cost information generated by the proposed procedure is useful for both “cost bottleneck” identification and performance evaluation, and thus can facilitate executional cost management at the plant-floor level.