In today’s competitive environment, agility and leanness have become two crucial strategic concerns for many manufacturing firms in their efforts to broaden market share. Recently, the build-to-order (BTO) manufacturing strategy is becoming a popular operation strategy to achieve both in a mass-scale customization process. BTO system combines the characteristics of make-to-order strategy with a forecast driven make-to-stock strategy. As a means to improve customer responsiveness, customized products are assembled according to specific orders while standard components are pre-manufactured based on short-term forecasts. Planning of the two subsystems using a two-phase sequential approach offers both operational and modeling incentives. In this paper, we formulate a two-phase mixed integer linear programming (MILP) model for material procurement, components fabrication, product assembly and distribution scheduling of a BTO supply chain system. In the proposed approach, the entire problem is first decomposed into two subsystems and evaluated sequentially. The first phase deals with assembling and distribution scheduling of customizable products, while the second phase addresses fabrication and procurement planning of components and raw-materials. The objective of both models is to minimize the aggregate costs associated with each subsystem, while meeting customer service requirements. The search space for the first phase problem involves a complex landscape with too many candidate solutions. A genetic algorithm based solution procedure is proposed to solve the sub-problem efficiently.
