Inventory management in hierarchical systems of production planning and control

In production planning and control, there are various problems which have to be solved, differing with respect to the object itself, the planning horizon and the time grid, as well as with regard to the degree of aggregation. In particular, the medium-term production program, i.e. the kind and the amount of commodities to be produced, has to be derived from forecasts of demand and customers' orders. Usually, it is developed for a period of time between half a year and two years with intervals of one month or less. Within a rolling horizon framework, the program is revised every month; the first month is fixed and the following months are tentative. Furthermore, inventory management has to transform the fixed part of the production program into batches of production.