Aggregate and detailed production planning integrating procurement and distribution plans in a multi-site environment

A monolithic mixed integer linear goal programming (MILGP) model that is developed in this paper produces a time and capacity aggregated production plan, a detailed production plan, a detailed procurement plan and a detailed distribution plan simultaneously to overcome the drawbacks of the hierarchical/sequential planning approaches of not yielding a feasible and/or an optimal plan. The model uses different time-grids and planning horizons for aggregate and detailed planning to reduce the computational burden. The limitations of storage space, raw material availability and production capacity at plants and a requirement of maintaining a minimum level of inventory buffer or forward cover have been modelled. Two heuristics that are proposed to solve the MILGP model gave good quality solutions with an average and the worse case optimality gap of 1.17% and 4.4% respectively when applied to one hundred randomly generated industry size problem instances.