Operational production planning in a chemical manufacturing environment

This paper develops a heuristic for operational production planning in a chemical processing environment, characterized by a single bottleneck machine, fixed batch sizes, sequence-dependent setup times, as well as production and storage capacity constraints. The algorithm aims at pre-producing future production requirements in order to reduce the total relevant cost, consisting of inventory holding costs and opportunity costs due to setups between production runs. The procedure takes care of lot-sizing, but also determines pretty good production sequences per period according to an approximate traveling salesman algorithm. A numerical example is given in which production lot-sizes and production sequences are determined for 15 products over a 20 week planning horizon under tight capacity conditions.