Abstract
Production planning problems have been formulated and solved as optimization problems since the early 1950s, and an extensive literature has been developed. The widespread use of Enterprise Resource Planning systems and developments in information technology and scientific computing have opened the way for even wider use of these techniques in industry. In this chapter, we review the basic formulations that have been the mainstay of academic research and industrial practice for the last five decades, assess their strengths and weaknesses, and discuss a number of interesting new directions that have emerged recently. We especially focus on models that support decisions on production volumes and order release over time and highlight the related issues on determining planned lead times.
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Notes
- 1.
Simulation results indicate that traditional order release mechanisms can in fact reduce average total throughput time of orders (pool waiting time plus shop flow time) and do not just shift the waiting time from the shop to the pool, possibly increasing total flow time due to reduced shop capacity (for this critique, see Kanet 1988). A possible reason is the load balancing effect. A good order release mechanism limits the shop load, but it also aims at keeping the level of WIP at the target level for each work center, thus balancing the load among the work centers by releasing orders with different routing. (For simulation results on total throughput time reduction, see Land 2004.)
- 2.
In general, we use the term flow time when we consider this time span from a manufacturing perspective, and the term lead time when it is considered from a planning perspective; see Hopp and Spearman (2001, p. 321). The terms are not always clearly distinguished in the literature.
- 3.
- 4.
Due to the computational complexity, the summation in (16.61) has been performed for n=0,…, 80 in the numerical examples below. This ignores at most 1.5% of the cases (for ρ=0.95 in steady state), in most cases the error is close to zero.
- 5.
The index for the periods (discrete time) is denoted as subscript, the continuous time is denoted in parenthesis.
- 6.
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Acknowledgments
The research of Reha Uzsoy was supported by the National Science Foundation under Grant DMI-0556136, by the Intel Research Council, by a software grant from Dash Optimization and an equipment grant from Intel Corporation.
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Missbauer, H., Uzsoy, R. (2011). Optimization Models of Production Planning Problems. In: Kempf, K., Keskinocak, P., Uzsoy, R. (eds) Planning Production and Inventories in the Extended Enterprise. International Series in Operations Research & Management Science, vol 151. Springer, New York, NY. https://doi.org/10.1007/978-1-4419-6485-4_16
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