Integrated production planning and scheduling using a decomposition framework

To ensure the consistency between planning and scheduling decisions, the integrated planning and scheduling problem should be addressed. Following the natural hierarchy of decision making, integrated planning and scheduling problem can be formulated as bilevel optimization problem with a single planning problem (upper level) and multiple scheduling subproblems (lower level). Equivalence between the proposed bilevel model and a single level formulation is proved considering the special structure of the problem. However, the resulting model is still computationally intractable because of the integrality restrictions and large size of the model. Thus a decomposition based solution algorithm is proposed in this paper. In the proposed method, the production feasibility requirement is modeled through penalty terms on the objective function of the scheduling subproblems, which is further proportional to the amount of unreachable production targets. To address the nonconvexity of the production cost function of the scheduling subproblems, a convex polyhedral underestimation of the production cost function is developed to improve the solution accuracy. The proposed decomposition framework is illustrated through examples which prove the effectiveness of the method.