Pinch analysis for aggregate production planning in supply chains

Global competition has made it imperative for the process industries to manage their supply chains optimally. The complexity of the supply chain processes coupled with large computational times often makes effective supply chain management (SCM) difficult. Production system is an important component of a supply chain. This paper introduces a novel approach for aggregate planning of production in supply chains. The approach derives inspiration from pinch analysis, which has been extensively used in heat and mass exchanger network synthesis. By representing demand and supply data as composites, it gives planners greater insight into the SCM process and thus facilitates re-planning and quick decision-making. Two case studies are solved, one involving a single product and another involving multiple products on a single processor. For the first case study, optimal production plans are obtained and matched with the results obtained by solving equivalent optimization problems in GAMS®. For the second case study, an algorithm is proposed to determine the sequence of production of the multiple products. The initial guess obtained by following the algorithm reduces the computational time to one-sixth of the time otherwise taken by the solver. It may be concluded that plans obtained by pinch analysis provide either the best aggregate plans or excellent starting points to reduce the computational time for solutions by mixed integer programming formulations. © 2003 Elsevier Ltd. All rights reserved.