A hierarchical planning model for multistage production systems

This paper presents a hierarchical planning model for a single facility comprising a number of work-centers that produce multiple part types. The planning horizon includes a sequence of time periods for which the part demand is known. The production planning problem consists of minimizing the holding costs for the work-in-process and finished goods inventory and the backlogging costs for unfulfilled demand. We present a two-level hierarchy that is based on aggregating part types to part families, work-centers to manufacturing cells and time periods to aggregate time periods. The solution of the aggregate optimization problem is imposed as a target in the optimization problems at the detailed level. Furthermore, the architecture uses a rolling horizon strategy to manage production. Numerical results are presented to demonstrate the effectiveness of the hierarchical approach