Abstract: Research manufacturing enterprises adopt the way of hybrid MTS-MTO to provide products and service of strategies for different customers. In this paper, we aim to use a set flexible controllable dynamic equipments to process the different needs of MTS and MTO production projects. Therefore, a multi-server queuing model is developed, where a subset of the servers or machines is dynamically switched between MTS and MTO production via a congestion-based switching policy. Using the quasi-birth-death process and the phase-type distribution, MTS-MTO queuing system equilibrium conditions and the steady-state probability matrix geometric solutions are obtained. By solving partitioned matrix equations, the system queue length, average waiting for captain, customer service levels and other performance indicators are given. Furthermore a system operating costs optimization mathematical model is established. Using simulation search algorithm, the key parameters of the system boundary value are determined and the optimal policy of hybrid system operation is found. The numerical simulation and performance comparison and analysis results show:(1) Dynamic switching policy can more quickly help the MTS to recover the target inventory, control the risk of shortage and reduce the inventory holding cost. When the shortage rate reaches 1.1% of MTS dynamic system, the static system safety inventory level must increase from 26 to 160 to satisfy the demand and increase the static inventory pressure. (2)The the minimum number of the equipment configuration or lowest cost of inventory of production switching time are found to satisfy the customer service level, and it is found that the dynamic system of the average queue length is less than that of the static system. Even holding less finished goods inventory, the shortage rate of MTS in dynamic system (0.3%) is lower than that of the static system (0.9-4.8%). (3) Extracting from the MTS to the advantage of extra capacity is not enough to make up for the replacement cost, caused by the switch system and single equipment of switch system become the substitute method of the hybrid system, the inventory operation policy to design that dynamic system to control the static system of three key performance indicators:average level of inventory, shortage rate of MTS and queue length of MTS and MTO to achieve optimum operation. (4)When the maximum intensity 3.8 of system average arrival rate, system service level 0.95, policy of hybrid operation reduce 2/3 average queue length of the static system, firm can accept more orders and shorten MTO order delivery time during of the queue length decreases.

Key words: MTS, MTO, queuing system, flexible production, hybrid decision