Hierarchical production planning and scheduling in a multi-product, multi-machine environment

A hierarchical production planning and scheduling model is developed to solve a real-world problem in fibre manufacturing scheduling. The problem under study requires determining production sequences in the presence of variable setup costs in a multi-machine and multi-product environment. The concept of expected setup cost is developed to reduce the difficulty of addressing sequence-dependent setup costs at the aggregate level. A mixed integer linear programming model incorporates the logic of expert systems to minimize the number and costs of machine setups and other associated costs. At the daily operational level, a set of heuristics is developed to manage contingencies, such as machine breakdowns and changes in demand. The heuristics effectively utilize idle capacity and inventories to smooth production and avoid unnecessary extra setups, therefore maintaining system stability. Data provided by the fibre plant are used to validate the model. Compared to the actual schedule, results from the model are more consistent with managerial priorities and substantial cost savings are obtained.