Reduction of inventory level and shipment delays in a continuous process manufacturing system

This paper describes a production-inventory model with process and inventory constraints developed for a continuous process manufacturing system in a large chemical plant. The chemical plant considered in this study has 5 production units, producing 64 different grades of products. Given the demand forecast by grades, the objective of the modeling efforts is to generate a production schedule that can reduce inventory to the minimum while making on-time shipments of products. A goal-programming model was developed first to determine the grade-unit assignments and the length of each production run by minimizing the deviation from the production capacity of all production units. A heuristic scheduling procedure was then used to determine the day-to-day production schedule for all units and to control inventory level over the planning horizon. The test results based on historical data from the plant indicated the proposed algorithm would generate a feasible production schedule to reduce to shipment delays without violating process and inventory constraints.