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Considers a multi‐stage multi‐product production, inventory and transportation system including lot production processes and develops a mathematical model for a pull type ordering system. The decision variables of the presented model are initial ordering quantities and the objective is to minimize the sum of the replenishment level at each inventory point. The model is formulated as an integer programming problem, and an approximate procedure is proposed to obtain a near optimal solution in short time using a mathematical programming package. Finally, shows a numerical example of the model applied to an actual manufacturing system of an automobile parts manufacturer in order to verify the effectiveness of the solution procedure and to clarify the applicability of the modelling approach.

During the past decade, the market for consumer and industrial goods in South‐East Asia has grown at a rapid rate and industrial countries in this region have been trying to advance their national plans to stimulate economic take‐off. However, in the middle of 1997, the ASEAN bubble economy started to collapse after devaluation of the baht. In this paper the current status and future direction of Japanese manufacturers in Thailand are discussed through facts investigations and a survey execution. The results from this investigation indicate that the Japanese offshore manufacturers in Thailand are at an earlier stage than their domestic counterparts in Japan, in terms of manufacturing strategies and action programmes. Therefore, offshore manufacturers are in a much more severe situation than domestic firms, although one of their major reasons for joining the Thai manufacturing industry was to recover from the ending of Japan’s own bubble economy.