ORDER ALLOCATION PROCESS IMPROVEMENT IN A FOOTWEAR INDUSTRY

Abstract

Three heuristics are proposed to improve the product allocation process of the case study manufacturer based on three actual business constraints; customer priority, delivery time, and order size. The focused Key Performance Indexes (KPIs) include order fill rate, quantity fill rate, line fill rate, and back order rate. The proposed heuristics, together with the basic First-come-First-Serve allocation strategy, are tested with actual order and inventory data gathered from the company. The resulting KPIs are then evaluated with those of the current operation. Based on our results, all KPIs could be improved by any of the proposed heuristics, including FIFO, where the magnitude of improvement differs from one to another allocation strategy. In order to recommend the best allocation heuristic to the company, we also explore both advantages and disadvantages of each heuristic. We found that proper inventory management can play a major roll in the improvement of focused KPIs.