Hierarchical Integration of Production Planning And

This paper describes the development of a hierarchical planning and scheduling system for a multiple plant, multiple product, seasonal demand situation. In this hierarchical structure, optimal decisions at an aggregate level (planning) provide constraints for detailed decision making (scheduling). Four levels of decision making are used: first, products are assigned to plants (using mixed-integer programming), making long-term capacity provision and utilization decisions; second, a seasonal stock accumulation plan is prepared (using linear programming), making allocations of capacity in each plant among product Types within which the products have similar inventory costs; third, detailed schedules are prepared for each product Family (using standard inventory control methods for items grouped for production since the Items in a Family share a major setup), allocating the type capacity among the product Families in the Type; fourth, individual run quantities are calculated for each Item in each Family, again using standard inventory methods. The approximations used and the procedures developed are described in sufficient detail to guide a similar application. We also discuss the problems encountered in implementation and the approach used to resolve these problems. Finally, we estimate the costs and benefits of this system application. Hierarchical Integration of Production Planning and Scheduling Arnoldo C. Hax* and Harlan C. Meal**