An integrated aggregate and detailed planning in a multi-site production environment using linear programming

This paper considers production planning of multi-site production facilities with substitutable capacities serving multiple selling locations where the supplying plant is dynamically determined. A linear programming model is developed to produce the time and capacity aggregated plan and the detailed plan simultaneously to overcome the drawback of the hierarchical planning approaches of not yielding a feasible and/or an optimal lower-level (i.e. detailed) plan. Different time grids and planning horizons for aggregate and detailed planning are appropriately used to reduce the computational burden. Factors such as the limitations of storage space, raw material availability and production capacity at plants and a requirement of maintaining a minimum level of inventory buffer have been modelled. The proposed methodology generated high quality production and dispatch plans when applied to a consumer goods company case.