Production Planning and Scheduling

Group 9 Bipul Megotia Gaurav Kataria Jammy Maisnam Kaavish Kidwai Neer Prajapati

Production Planning
Scheduling production Manufacturing production Controlling production activities

Dealing with the Problem Complexity through Decomposition

Corporate Strategy Aggregate Unit Demand Aggregate Planning
(Plan. Hor.: 1 year, Time Unit: 1 month)

Capacity and Aggregate Production Plans End Item (SKU) Demand Master Production Scheduling
(Plan. Hor.: a few months, Time Unit: 1 week)

SKU-level Production Plans Manufacturing and Procurement lead times Part process plans Materials Requirement Planning
(Plan. Hor.: a few months, Time Unit: 1 week)

Component Production lots and due dates Shop floor-level Production Control
(Plan. Hor.: a day or a shift, Time Unit: real-time)

Aggregate Planning Solution techniques

Solution Approaches
Graphical Approaches: Spreadsheet-based simulation Analytical Approaches: Mathematical (mainly linear programming) Programming formulations

A prototype problem
Forecasted demand: Jan: 1280 Feb: 640 Mar: 900 Apr: 1200 May:2000 Jun: 1400 On-hand Inventory: 500 Required on-hand Inventory at end of June: 600 Current Workforce Level: 300 Worker prod.capacity: 0.14653 units/day Working days per month Jan: 20 Feb: 24 Mar: 18 Apr: 26 May: 22 Jun: 15

Cost structure: Inv. holding cost: $80/unit x month Hiring cost: $500/worker Firing cost: $1000/worker

A prototype problem (cont.)

Forecasted demand: Jan: 1280 Feb: 640 Mar: 900 Apr: 1200 May:2000 Jun: 1400 On-hand Inventory: 500 Required on-hand Inventory at end of June: 600 Net predicted demand: Jan: 780 Feb: 640 Mar: 900 Apr: 1200 May: 2000 Jun: 2000

An LP formulation for the prototype problem

Problem Parameters Dt = Forecasted demand for period t dt = working days at period t c = daily worker capacity W0=Initial workforce level I0 = Current on-hand inventory CH = Hiring cost per worker CF = Firing cost per worker CI = Inventory holding cost per unit per period Problem Decision Variables Ht = Workers hired at period t Ft = Workers fired at period t Wt = Workforce level at period t Pt = Level of production at period t It = Inventory at the end of period t

An LP formulation for the prototype problem

6 t !1 6 t !1 6 t !1

min(C H H t  C F Ft  C I I t )
s.t.

Wt ! Wt 1  H t  Ft , t ! 1,...,6
Pt ! ( d t c) Wt , t ! 1,...,6

I t ! I t 1  Pt  Dt , t ! 1,...,6

I 6 ! 600
Wt , H t , Ft , Pt , I t u 0, t ! 1,...,6

Optimal Plan for the considered example

Fire 27 workers in January Hire 465 workers in May Produce at full (labor) capacity every month Resulting total cost: $379320.900

WHY WE NEED PRODUCTION PLANNING & SCHEDULING

Problem area
complex production environments
plastic, petrochemical, chemical, pharmaceutical industries

several different resources

producers, movers, stores

batch/serial processing with time windows transition patterns (set-up times) by-products, co-products (re-cycling) non-ordered production (for store) alternatives
processing routes, production formulas, raw material

Problem area - example & objectives

complex production environment
silo processor B1 purchas e processor A silo processor B2 sacks warehous e order order

Task preparing a schedule for a given time period (not minimising the makespan) objective
maximising the profit (minimising the cost)

Constraint Programming (CP)

Declarative problem solving stating constraints about the problem variables
a set of variables X={x1, ,xn} variables domains Di (usually finite set of possible values) a set of constraints (constraint is a relation among several unknowns)

finding a solution satisfying all (most) the constraints

systematic search with consistency techniques & constraint propagation stochastic and heuristic methods (local search)

CP - Advantages & Limitations

Advantages declarative modelling
transparent representation of real-life problems easy introduction of heuristics

co-operative solving
integration of solving methods from different areas (OR, AI )

semantic foundation
amazingly clean and elegant languages

Weaknesses NP-hard problems & tractability unpredictable behaviour model instability

Planning and Scheduling - Traditional View

Planning
finding a sequence of activities Scheduling transferring the initial world allocating the activities to into a required state available resources over time AI & CP respecting the constraints OR & CP PLANNER
Plan = a list of activities

SCHEDULER
Schedule = allocated activities

uses scheduler s constraints (otherwise too tighten or too relaxed plans)

all activities are know in advance

Planning and Scheduling in Industry

not strictly distinguished
different discrimination criteria (time horizon & resolution)

marketing planning
what and when should be produced not planning in AI terminology

production planning
generation of activities allocation to departments

production scheduling
exact allocation of activities to machines over time sometimes new activities introduced

Separate Planning and Scheduling

Co-operation between planner and scheduler
too tighten plans (impossible to schedule) too free plans (less profitable schedule)

backtrack from the scheduler to the planner

Activity generation what if appearance of the activity depends on the allocation of other activities?
alternatives transition patterns (set-ups) processing of by-products non-ordered production

Mixing Planning and Scheduling

A scheduler with planning capabilities
generating activities during scheduling
MARKETING PLANNING Marketing Plan = what should be produced (custom orders plus expected stock) PRODUCTION SCHEDULER ACTIVITY GENERATOR Activity Values for parameters Schedule - what activities are necessary to satisfy the marketing plan - how the activities are allocated to the resources over time

ACTIVITY ALLOCATOR

Conceptual models
view of time? discrete time (time slices with equal duration) even-based time (activities)

time-line model

grouping activities?

per order (task)

per resource

order-centric model

resource-centric model

Expressiveness
What could be modelled? (problem area) What is easy/hard to express? (constraints)

Constraint classification in scheduling

resource constraints
resource limits in given time point capacity, compatibility

transition constraints
activity transitions in single resource set-ups

dependency constraints
dependencies between different resources supplier-consumer relation

 a discrete time line with time slices

Production (item1) Change-over Production (item 2) Production (item 3)

Time-line model
Storing (item 1) Storing (items 1&B) empty No production Production (item4) Production (item5)

description of situation at each time point/slice planning and scheduling - no difference

a variable for activity in the description of time point/slice

comments
covers all the typical problems in complex production environments all the variables are known in advance
too many variables in large-scale industrial problems

resources

empty

Time slice

time

Order-centric model
a chain of activities per order (task)
time polymerizing storing extruding storin g resources polymerizing storing extruding storing

description of the activity

start, end (duration), resource

enhancement
activities in the production chain are generated during scheduling starting from the order (alternatives, set-ups) sharing activities between production chains (by-products)

How to model? (in order-centric model)

alternatives
pre-processing (chosen by the planner) alternative activities in slots

set-ups
set-up slot is either empty or contains the set-up activity (depending on the allocation of the next activity)

by-products (re-cycling)
sharing activities between the production chains

non-ordered production
pre-processing (non-ordered production is planned in advance before the scheduling)

Resource-centric model
a sequence of activities per resource what the resource can process rather than how to satisfy the order
Production (item1) Change-over Production (item 2) Production (item 3) empty Production (item5) No order time

description of the activity

start, end (duration), quantities, state, suppliers, consumers

representation
a list of virtual activities transition constraints between successive activities

resources

empty

Storing (item 1) No production No order

Storing (items 1&B) Production (item4) Order1

Comparison of models
Time-line Resource constraints Transitions Dependencies Non-ordered production Cycling Alternatives DRAWBACKS easy easy easy implicit implicit implicit too many variables Order-centric complicated complicated easy no (limited) limited limited limited capabilities Resource-centric easy easy complicated implicit implicit implicit

What s next?
ad-hoc implementation
dynamic constraints propagation (early detection of inconsistencies) labelling (incremental) heuristics (choice of alternatives)

theoretical foundation
structural constraint satisfaction (A. Nareyek)

parallelism
agent based scheduling

Program-Centric Strategic Planning

organizations are ill-prepared for the competitive demands and lack the discipline to identify, organize, and execute the appropriate work in any sustainable way. Need for an advanced way of planning and orchestrating strategic direction-setting. Changes need to be made on the fly. Pressure to automate business processes.

R.I.T.A.
Resilient I.T. Architecture - resilience built in capable of rapid change and extensibility Four basic dimensions Work the work performed by the organization Information the data needed to perform the work Applications the automated systems needed to manage the data Technology the computing and communication devices needed to run the systems

Uninterrupted Business Design

Mass production to mass customization Focus on forging relationship with vendors in order to be able to outsource business processes to meet fluctuating demand. Most industried required to radically restructure business before going for automation.

A CASE STUDY

Saturn: Production Planning and Scheduling

Background Business Process Redesign: Process, IT Implications

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SATURN: BACKGROUND

General Motors, Saturns Parent, Is the Worlds Largest Industrial Corporation and Leading Automobile Producer
Revenues for 1992 were $132.4 billion, and net income was $92 milliona Automotive Products generated $118.6 billion in sales, but experienced an operating loss of $3.2 billion (before accounting changes):
- Operating loss comes from North American operations:
International operations earned profit of $1.2 billion in sales of $30.8 billion

- Performance improved over 1991; sales increased 8.6% and losses decreased by 92%

Brands include GMC Truck, Chevrolet, Buick, Cadillac, Oldsmobile, Pontiac and Saturn GMs subsidiaries have been extremely profitable:
- GMAC, GMs vehicle financing subsidiary: $1.2 billion in profits - EDS: $600 million in profits - GM Hughes Electronics: $700 million in profits

Despite the poor performance of its parent, Saturn has grown at record pace, increasing its market share ten-fold from 1990 to 1991.
a. Including accounting changes, GM experienced net loss of $23.4 billion
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SATURN: BACKGROUND

GM Has Experienced Erosion of Its Market Share

60% 50%

General Motors Market Share of U.S. Auto Sales

40%

30% 20%

10%

1984

1985

1986

1987

1988

1989

1990

1991

Year
Source: Business Week, April 20, 1992, p. 32.
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SATURN: BACKGROUND

GM Faces Significant Challenges from Lean Manufacturers, Both Here and Overseas
Chrysler: New platforms New dealer awareness Ford: Successful platform teams Leaner systems Toyota: Best-in-Class production system:
- Level scheduling - Lower inventory - Supplier coordination

Other Japanese manufacturers: Rationalized production alternatives Lower inventory

Competitive Pressures

Industry overcapacity Increased labor costs

Intense competitive Intense competitive environment for GM environment for GM

Customer dissatisfaction with: Long lead times Dealer relations

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SATURN: BACKGROUND

GMs Eroding Share Is Largely a Result of Outdated Production Paradigms and Business Processes
The buffer of dealers between consumer production and demand
Materials Flow:
Parts Supplier GM Dealer Inventory Dealer Operations Customers

Information Flow:
Supplier Requests Production Information Dealer Orders Demand Information

Customers

Production runs batched in stamping, body, paint, and trim Large inventory stocks at each station 10,000 suppliers in 1988 and 5,500 in 1991; all operating in batch mode

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SATURN: BUSINESS PROCESS

GMs Traditional Business Process Suffered from Key Weaknesses

Order process:
- Limited dealer choice of available cars - Long lead time for a customor new order

Information systems:
- No trading of real order data - No synchronization with supplier - Little adherence to ideal sequence

Process and materials issues:

- Dealer buffer - Large parts inventories

Manufacturing:
- Large setups - Focus on long runs and quotas
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SATURN: BUSINESS PROCESS

GM Set Up Saturn as an Independent Entity with a New Paradigm

How to provide superior service? How to deliver cars in 12 days? How to develop worker, supplier, and dealer partnerships? How to develop system capturing world-class lean principles? How to treat distribution and supplier as integral part of production chain? Separate entity Centralized Greenfield plant Goal of one supplier per input Direct EDI input to suppliers Noncompetitive retailers with electronic linkup Supply chain information system Integrated supply production-distribution

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SATURN: BUSINESS PROCESS

Saturns IT Systems Play a Critical Part in Integrating Its Supply Chain

Information Flow:
Allocations Deliveries Materials Schedule Materials Management Integrated system with engineering, materials and retailer orders Production Planning Order management system and allocation system Demand Sales Data

Suppliers

Retailers

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SATURN: BUSINESS PROCESS

Important System Characteristics Help State-of-the-Art Forecasting

Recognizing underlying uncertainty Incorporating an implicit or external model Historical data and statistical analysis to update parameter and to track errors Sharing of endpoint data Measuring price effects Aggregate forecasts with disaggregation Consensus among players
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SATURN: BUSINESS PROCESS

Saturns Time Horizon Is Based on a Benchmarking Study

Time 22 weeks 48 weeks

Planning Flexibility Aggregate plan 10% on model type 20% on options 5% on options Load plant, 5% exterior colors

23 weeks 1 week

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SATURN: BUSINESS PROCESS

Saturns Production Planning Process Is Integrated with Dealers, Suppliers, and Major Component Manufacturers
Places custom orders on pipeline Issues weekly budgets for dealer distribution Gives 12 weeks for Saturns 300 suppliers to react Suppliers own parts until car is finished Handles daily orders and deliveries on preplanned routes and scheduled dock times Demands flexible component manufacturing, with focus of efficiency only at bottlenecks

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SATURN: BUSINESS PROCESS

The Ideal System Pulls Requirements Exactly When Needed but May Need an Interior Buffer
Saturn and other lean manufacturers recognize need for buffer Goal, however, is to minimize buffers Ideally, buffers are at start and finish Efficiency important only at bottlenecks Minimize setups

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SATURN: IMPLICATIONS

Saturns Solid Results Are Related to Managing the Entire Production and Supply Chain for the Benefit of Its Customers
Outstanding dealer satisfaction (second only to Lexus in 1991) Sixth in owner satisfaction overall; first in its class Second in sales and third in profit per outlet Significant reductions in inventory and suppliers Lower lead times for customers

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SATURN: IMPLICATIONS

A Number of Key Lessons Can Learned from the Saturn Experience

Must build infrastructure for supply chain communication Customer focus is essential Importance of information systems for total system Must focus on eliminating buffers Importance of demand pull Must focus on all sources of waste (dealers, sequence, etc.) Sensitivity to production stability at some level is necessary Must have supplier synchronization Distinction of bottlenecks (non-bottlenecks can be more idle)
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