Production planning and quality of service allocation across the supply chain in a dynamic lead time model

We propose a supply chain (SC) production planning methodology optimizing inventory costs under quality of service (QoS) guarantees. Non-linear Clearing Functions are estimated using explicit models of stochastic production dynamics. A minimum inventory cost production plan is obtained subject to desired QoS guarantees. The proposed methodology employs time scale driven decomposition of the original problem to (i) a large time scale (e.g. week) planning master problem and (ii) short time scale (e.g. hour) facility-specific sub-problems estimating WIP and IFI levels and associated sensitivity information with respect to tentative master problem decisions. Computational experience and Monte Carlo simulation verification of the accuracy of the proposed SC production planning methodology is presented to demonstrate its potential effectiveness relative to industry practice.