Aggregate Production Planning

Basic planning problem

Planning problem modeling

Optimization problem

Multi-machine multi-product planning problem

Modeling planning problem

Optimization problem

Dr. Ali Cheaitou - UoS 2013

Aggregate Production Planning

Dynamic behavior
Demand
Ii,t-1

Iio

Period

Period

Period

Dynamic equation: Iit = Ii,t-1+Pit-Dit

Constraints: Pit 0
Iit 0

Ii,t

i = 1,, N and t = 1,, T

i = 1,, N et t = 1,, T
i = 1,, N et t = 1,, T

Decision variables: Pit (i = 1,, N et t = 1,, T)

Remark: in optimization models, we may make the assumption
that the Pit are continuous variables

Dr. Ali Cheaitou - UoS 2013

Aggregate Production Planning

Basic Model

Assumptions

Single product
Single machine
No possible capacity change
All orders must be satisfied

Notations

Dt : total demand forecast at period t (t = 1,, T)

Pt : total quantity produced at period t (t = 1,, T)
It : inventory level at the end of period t (t = 1,, T)
I0 : initial inventory level (at the beginning of the planning horizon)
ht : unit inventory holding cost, charged at the end of period t
ct: unit production cost at period t
m : total processing time of the machine to produce a product unit
Mt : total time of availability of the machine in period t (capacity)

Dr. Ali Cheaitou - UoS 2013

Aggregate Production Planning

Planning illustration

Demand
Production
Production
Capacity

Month

Dr. Ali Cheaitou - UoS 2013

Aggregate Production Planning

Optimization Problem Formulation
T

Minimize total cost:

Z = (ht I t + ct Pt )
t =1

Subject to (constraints):

I t = I t 1 + Pt Dt , t = 1,..., T
Pt 0,

t = 1,..., T

I t 0,

t = 1,..., T

mPt M t ,

t = 1,..., T

Pt , t = 1,..., T

Decision variables

This problem is a Linear Program (linear objective function and linear

constraints)

Dr. Ali Cheaitou - UoS 2013

Aggregate Production Planning

Basic planning problem

Modeling planning problem

Optimization problem

Multi-machine multi-product planning problem

Modeling planning problem

Optimization problem

Dr. Ali Cheaitou - UoS 2013

Manufacturing and Sales Plan (MSP)

Extension: Multi-Machine Multi-Product

Assumptions

N products
K machines (workstation)
No possible capacity change
All orders must be satisfied

Notations

Dit : total demand forecast of product i at period t (t = 1,, T, i=1,,N)

Pit : total quantity of product i produced at period t (t = 1,, T, i=1,,N)
Iit : inventory level of product i at the end of period t (t = 1,, T , i=1,,N)
Ii0 : initial inventory level of product i (at the beginning of the planning horizon) (i=1,,N)
hit : unit inventory holding cost of product i, charged at the end of period t
cit : unit production cost of product i, at t (t = 1,, T , i=1,,N)
mik : total processing time of the machine k to produce a unit of product i (i=1,,N, k=1,,K )
Mkt : total time of availability of the machine k in period t (capacity) (t = 1,, T , k=1,,K)

Dr. Ali Cheaitou - UoS 2013

Manufacturing and Sales Plan (MSP)

Optimization Problem Formulation
N

Minimize total cost:

Z = (hit I it + cit Pit )

i =1 t =1

Subject to (constraints):

I it = I i ,t 1 + Pit Dit , i = 1,..., N ; t = 1,..., T

Pit 0,

i = 1,..., N ; t = 1,..., T

I it 0,

i = 1,..., N ; t = 1,..., T

ik

Pit M kt ,

k = 1,..., K ; t = 1,..., T

i =1

Pit , i = 1,..., N ; t = 1,..., T

Decision variables

This problem is a Linear Program (linear objective function and linear

constraints) at it can be solved with Excel Solver
Dr. Ali Cheaitou - UoS 2013