A Proposed Hierarchical Production Planning Structure for Combined MTS/MTO Environments

From the viewpoint of the relationship between production release and order arrival, production system can be classified into make-to-stock (MTS), make-to-order (MTO), assemble-to-order (ATO), and engineer-to-order (ETO) systems. Production planning is a complicated task which requires cooperation among multiple functional units in an organization. Planning is the consequence of a hierarchy of decisions dealing with different issues in the manufacturing environment. A classical approach to handle this multi-level decision-making process is hierarchical production planning (HPP). There are only a handful of research papers that explicitly talk about the combined MTO/MTS situation and even there are fewer papers using HPP in these kinds of environments. In this paper we propose a hierarchical model in combined MTS/MTO environments, consists of four phases include: MTS/MTO products separation, acceptance/rejection of incoming MTO orders, HPP, and master production planning. Key-words: Hierarchical production planning, Combined MTS/MTO environments, Linear Programming.