Production Planning with Postponement Strategy Based on Classification of Product Differentiations

This paper was motivated by the practices of some Chinese automobile manufacturers who had changed their production planning processes in order to obtain more demand information. We regard their methods as an example of postponement implementation in production planning and name it as production planning postponement (PPP). Firstly, by treating PPP as a two-level hierarchical structure problem which is characterized by families and items we develop an analytical model for evaluating the value of this kind of postponement. Secondly, we propose an algorithm based on generalized linear programming for solving the model. Then we illustrate the effectiveness of PPP by using a numerical example and discuss the impact of prediction accuracy on the performance of PPP. The results of a numerical example show that if the demand is overestimated at initial time PPP can perform quite well. Finally, we set future research directions on PPP suggested by our results.