Production Planning At Different Levels Of Aggregation

Abstract

This chapter extends the flow control approach to the problems with multiple facilities and either single or multiple products characterized by simple structures. It, thus, deals with an intermediate hierarchical level that bridges aggregate production planning and detailed production scheduling characterized by complex product structures. Specifically, this chapter focuses on a typical problem arising in aggregate production planning and master scheduling — balancing materials and capacity requirements under given production and market conditions. The balancing is accomplished by dividing an aggregate material flow into subflows of specific items and allocating them among multiple manufacturing facilities. The goal of both the production plan and master schedule (in some companies it may be difficult to distinguish between them) is to optimally load the facilities when either initial inventory volumes or input inventory flows are predetermined at higher levels of top-down production planning hierarchy. This goal is achieved by tracking demands for products along a planning horizon in a make-to-order environment, or by filling the stocks with required volumes of products by the end of the planning horizon in a make-to-stock environment.