Two-stage stochastic master production scheduling under demand uncertainty in a rolling planning environment

This paper proposes a scenario-based two-stage stochastic programming model with recourse for master production scheduling under demand uncertainty. We integrate the model into a hierarchical production planning and control system that is common in industrial practice. To reduce the problem of the disaggregation of the master production schedule, we use a relatively low aggregation level (compared to other work on stochastic programming for production planning). Consequently, we must consider many more scenarios to model demand uncertainty. Additionally, we modify standard modelling approaches for stochastic programming because they lead to the occurrence of many infeasible problems due to rolling planning horizons and interdependencies between master production scheduling and successive planning levels. To evaluate the performance of the proposed models, we generate a customer order arrival process, execute production planning in a rolling horizon environment and simulate the realisation of the planning results. In our experiments, the tardiness of customer orders can be nearly eliminated by the use of the proposed stochastic programming model at the cost of increasing inventory levels and using additional capacity.     

A multi-stage stochastic programming approach for production planning with uncertainty in the quality of raw materials and demand

Motivated by the challenges encountered in sawmill production planning, we study a multi-product, multi-period production planning problem with uncertainty in the quality of raw materials and consequently in processes yields, as well as uncertainty in products demands. As the demand and yield own different uncertain natures, they are modelled separately and then integrated. Demand uncertainty is considered as a dynamic stochastic data process during the planning horizon, which is modelled as a scenario tree. Each stage in the demand scenario tree corresponds to a cluster of time periods, for which the demand has a stationary behaviour. The uncertain yield is modelled as scenarios with stationary probability distributions during the planning horizon. Yield scenarios are then integrated in each node of the demand scenario tree, constituting a hybrid scenario tree. Based on the hybrid scenario tree for the uncertain yield and demand, a multi-stage stochastic programming (MSP) model is proposed which is full recourse for demand scenarios and simple recourse for yield scenarios. We conduct a case study with respect to a realistic scale sawmill. Numerical results indicate that the solution to the multi-stage stochastic model is far superior to the optimal solution to the mean-value deterministic and the two-stage stochastic models.     

Manufacturing lot-sizing,procurement and delivery schedules over a finite planning horizon

In this study, an integrated manufacturing system for technology-related companies whose products are experiencing continuous price decrease during the life cycle is studied for optimal procurement, production and delivery schedules over a finite planning horizon. The model considers the inventory cost both at manufacturing and at delivery from supplier. Since the price is continuously decreasing, a manufacturing firm delivers the finished goods in small quantities frequently. Frequent deliveries in small lots are effective to reduce the total cost of the supply chain. The key for high-tech industries is to reduce the inventory holding time since the component prices are continuously decreasing, and this can only be achieved by implementing an efficient supply chain. Therefore, the main purpose of this paper is to develop an integrated inventory model for high-tech industries in JIT environment under continuous price decrease over finite planning horizon while effectively and successfully accomplishing supply chain integration so that the total cost of the system is minimal. An efficient algorithm is developed to determine the optimal or near-optimal lot sizes for raw material procurement, and manufacturing batch under a finite planning horizon. Finally, the solution technique developed for the model is illustrated with numerical examples.     

Chance-constrained formulations in rolling horizon production planning: an experimental study

Rolling horizon procedures, where an infinite horizon problem is approximated by the solution to a sequence of finite horizon problems, are common in production planning practice and research. However, these procedures also lead to frequent changes in planned release and production quantities, a phenomenon referred to as nervousness. We examine the performance of two chance-constrained production planning models developed for systems with stochastic demand in a rolling horizon environment, and find that these formulations significantly reduce planned release changes (nervousness) while also improving cost and service-level performance.     

Dynamic models of closed-loop supply chain and robust H∞ control strategies

To meet the current environmental challenges and sustainable development, closed-loop supply chain (CLSC) management has become increasingly important and urgent. In this paper, we mainly consider three uncertainties: (1) uncertainty of time-delay in re-manufacturing and returns, (2) uncertainty of system cost parameters, (3) uncertainty of customers’ demand disturbances. Using control theories we dynamically analyse and establish a class of dynamic closed-loop supply chain models of linear discrete time system, including the product return model, the re-manufacturing model and the third party reverse logistic providers (3PRLP) collecting model. Furthermore, we analyse the robust operations in the closed-loop supply chains and bring forward relative strategies with robust H_∞ control methods. Finally, according to the practical operations of scrap supply chain in the Chinese steel industry, we carry out some simulation calculations to prove how our proposed robust H_∞ control strategies can restrain all uncertainties of our closed-loop supply chain system. Our analyses and results may be helpful for further insight into closed-loop supply chain uncertain operations and production control, for both theoretical researchers and practitioners, especially for those in the Chinese steel manufacturing industry.     

A variable neighbourhood search for integrated production and preventive maintenance planning in multi-state systems

This paper presents a variable neighbourhood search (VNS) to the integrated production and maintenance planning problem in multi-state systems. VNS is one of the most recent meta-heuristics used for problem solving in which a systematic change of neighbourhood within a local search is carried out. In the studied problem, production and maintenance decisions are co-ordinated, so that the total expected cost is minimised. We are given a set of products that must be produced in lots on a multi-state production system during a specified finite planning horizon. Planned preventive maintenance and unplanned corrective maintenance can be performed on each component of the multi-state system. The maintenance policy suggests cyclical preventive replacements of components, and a minimal repair on failed components. The objective is to determine an integrated lot-sizing and preventive maintenance strategy of the system that will minimise the sum of preventive and corrective maintenance costs, setup costs, holding costs, backorder costs and production costs, while satisfying the demand for all products over the entire horizon. We model the production system as a multi-state system with binary-state components. The formulated problem can be solved by comparing the results of several multi-product capacitated lot-sizing problems. The proposed VNS deals with the preventive maintenance selection task. Results on test instances show that the VNS method provides a competitive solution quality at economically computational expense in comparison with genetic algorithms.     

Capacity and material requirement planning modelling by comparing deterministic and fuzzy models

A model for the capacity and material requirement planning problem with uncertainty in a multi-product, multi-level and multi-period manufacturing environment is proposed. An optimization model is formulated which takes into account the uncertainty that exists in both the market demand and capacity data, and the uncertain costs for backlog. This work uses the concept of possibilistic programming by comparing trapezoidal fuzzy numbers. Such an approach makes it possible to model the ambiguity in market demand, capacity data, cost information, etc. that could be present in production planning systems. The main goal is to determine the master production schedule, stock levels, backlog, and capacity usage levels over a given planning horizon in such a way as to hedge against the uncertainty. Finally, the fuzzy model and the deterministic model adopted as the basis of this work are compared using real data from an automobile seat manufacturer. The paper concludes that fuzzy numbers could improve the solution of production planning problems.     

Quality issue in forecasting problem of production and maintenance policy for production unit

In this study, we consider an unreliable deteriorating production system that produces conforming and non-conforming products to satisfy a random demand under a given service level and during a finite horizon. The production system is subjected to a failure-prone machine. The quality of the produced products is affected by the machine deterioration since the rate of defectives increases as the deterioration increases. Preventive maintenance actions can be piloted on the production system to reduce the influence of deterioration and the defective rate. A joint control policy is based on a stochastic production and maintenance planning problem with goals to determine, firstly, the economic plan of production and secondly, the optimal maintenance strategy. The proposed jointly optimisation minimises the total cost of production, inventory, maintenance and defectives. A failure rate and quality relationship are defined to show the influence of the production rates variation on the failures rate as well as on the defective rate. A numerical example and an industrial case study are adopted to illustrate the proposed approach and a sensitivity analysis to validate the jointly optimisation.     

A Two-Stage Planning Model for Power Scheduling in a Hydro-Thermal System Under Uncertainty

A two-stage stochastic programming model for the short- or mid-term cost-optimal electric power production planning is developed. We consider the power generation in a hydro-thermal generation system under uncertainty in demand (or load) and prices for fuel and delivery contracts. The model involves a large number of mixed-integer (stochastic) decision variables and constraints linking time periods and operating power units. A stochastic Lagrangian relaxation scheme is designed by assigning (stochastic) multipliers to all constraints that couple power units. It is assumed that the stochastic load and price processes are given (or approximated) by a finite number of realizations (scenarios). Solving the dual by a bundle subgradient method leads to a successive decomposition into stochastic single unit subproblems. The stochastic thermal and hydro subproblems are solved by a stochastic dynamic programming technique and by a specific descent algorithm, respectively. A Lagrangian heuristics that provides approximate solutions for the primal problem is developed. Numerical results are presented for realistic data from a German power utility and for numbers of scenarios ranging from 5 to 100 and a time horizon of 168 hours. The sizes of the corresponding optimization problems go up to 400.000 binary and 650.000 continuous variables, and more than 1.300.000 constraints.     

DISCRETE-TIME MINIMAX PRODUCTION PLANNING FOR MANUFACTURING SYSTEMS

This paper deals with the production planning problem for discrete-time manufacturing systems with deteriorating items. A minimax approach is presented throughout the paper for the case where the demand is unknown. Both the cases of finite horizon and infinite horizon are discussed. Moreover, the case of production planning for manufacturing systems with failure-prone machines is also considered. For this case, a stochastic approach is used in which the states of the machines are represented by a two-state Markov process with transition rates determined by the availability of the machines. Finally, a robust control policy to take care of plant uncertainties is developed. Simulation results are also presented to show the usefulness of the approaches.     

Multi-item reliability dependent imperfect production inventory optimal control models with dynamic demand under uncertain resource constraint

In this paper, imperfect multi-item production inventory models are considered over a finite time horizon with known dynamic demands. The production rates are functions of time which are taken as control variables. In the production process, reliability plays an important role to improve the quality of products and to decrease the defective rate. The said defective units are partially or fully reworked. The unit production cost is a function of production rate and also dependent on raw material cost, development cost due to reliability and wear-tear cost. There is a constraint on the total production cost termed as budget constraint which is crisp/imprecise/random in nature. The objective of the present investigation is to fix the optimum reliabilities of the production system to have maximum return. Thus, the models are formulated as optimal control problems for the maximisation of profit and solved using Hamiltonian (Pontryagin’s Maximum Principle), fixed-final time and free-final state system, Kuhn–Tucker conditions and Generalised Reduced Gradient Method. Several particular cases are derived from the general model. The models are illustrated numerically and graphically and some managerial decisions are derived.     

Optimal production control policy in unreliable batch processing manufacturing systems with transportation delay

This paper considers the problem of production planning of unreliable batch processing manufacturing systems. The finished goods are produced in lots, and are then transported to a storage area in order to continuously meet a constant demand rate. The main objective of this work is to jointly determine the optimal lot sizing and optimal production control policy that minimise the total expected cost of inventory/backlog and transportation, over an infinite time horizon. The decision variables are the lot sizing and the production rate. The problem is formulated with a stochastic dynamic programming model and the impulse control theory is applied to establish the Hamilton–Jacobi–Bellman (HJB) equations. Based on a numerical resolution of the HJB equations, it is shown that the optimal control policy is governed by a base stock policy for production rate control and economic lot size for batch processing. A thorough analysis and practical issues are addressed with a simulation-based approach. Thus, a combined discrete–continuous simulation model is developed to determine the optimal parameters of the proposed policy when the failure and repair times follow general distributions. The results are illustrated with numerical examples and confirmed through sensitivity analysis.     

A Stochastic Replacement Economic Decision Model

This paper describes a general model to solve stochastic replacement economy problems. A general probabilistic model to describe the uncertainty about the cash flows of current and future challengers is presented. The model is then expressed as a stochastic replacement problem and solved using Monte Carlo simulation and dynamic programming. The model can consider both finite and infinite horizon times. A numerical example is provided.     

Stochastic optimization model for order acceptance with multiple demand classes and uncertain demand/supply

This article considers an order acceptance problem in a make-to-stock manufacturing system with multiple demand classes in a finite time horizon. Demands in different periods are random variables and are independent of one another, and replenishments of inventory deviate from the scheduled quantities. The objective of this work is to maximize the expected net profit over the planning horizon by deciding the fraction of the demand that is going to be fulfilled. This article presents a stochastic order acceptance optimization model and analyses the existence of the optimal promising policies. An example of a discrete problem is used to illustrate the policies by applying the dynamic programming method. In order to solve the continuous problems, a heuristic algorithm based on stochastic approximation (HASA) is developed. Finally, the computational results of a case example illustrate the effectiveness and efficiency of the HASA approach, and make the application of the proposed model readily acceptable.     

A production-recycling-inventory model with learning effect

This paper develops an integrated production-recycling system over a finite time horizon. Here, the dynamic demand is satisfied by production and recycling. The used units are bought back and then either recycled or disposed of which are not repairable. The used units are collected continuously from the customers. Recycling products can be used as new products which are sold again. The rate of production and disposal are assumed to be function of time. The setup cost is reduced over time due to “Learning curve” effect. The optimum results are presented both in tabular form and graphically.     

Development of an optimal core steel slitting and inventory policy

The objective of this investigation is to develop an optimal slitting and inventory policy for a deterministic demand of steel over a finite planning horizon. The cost function includes the inventory carrying cost and the cost of scrap steel generated besides the usual fixed costs. The minimum of this cost function is obtained by using a combination of dynamic programming and integer linear programming which provides a practical and sound procedure. Actual data is used to determine the optimal solution for a planning horizon of ten weeks.     

A new multi-objective optimization model for preventive maintenance and replacement scheduling of multi-component systems

In this article, a new multi-objective optimization model is developed to determine the optimal preventive maintenance and replacement schedules in a repairable and maintainable multi-component system. In this model, the planning horizon is divided into discrete and equally-sized periods in which three possible actions must be planned for each component, namely maintenance, replacement, or do nothing. The objective is to determine a plan of actions for each component in the system while minimizing the total cost and maximizing overall system reliability simultaneously over the planning horizon. Because of the complexity, combinatorial and highly nonlinear structure of the mathematical model, two metaheuristic solution methods, generational genetic algorithm, and a simulated annealing are applied to tackle the problem. The Pareto optimal solutions that provide good tradeoffs between the total cost and the overall reliability of the system can be obtained by the solution approach. Such a modeling approach should be useful for maintenance planners and engineers tasked with the problem of developing recommended maintenance plans for complex systems of components.     

Operations scheduling under electricity time-varying prices

Global climate change requires stakeholders to consider energy elements in their decision-making. Electricity costs, in particular, constitute a significant portion of operational costs in most manufacturing systems. The electricity bills can be lowered if electricity-consuming operations are correctly scheduled. We consider a manufacturing operations control problem with known time-varying electricity prices in a finite planning horizon. Each operation is unique and has its own concave electricity consumption function. Pre-emptions of operations are allowed, yet postponing an operation incurs a cumulative penalty for each time period. In addition, each pre-emption is considered a new operation. The electricity cost in each time period is exogenous and there exists a capacity constraint on the total electricity amount consumed in each period due to infrastructure and provider’s limitations. There is a fixed start-up cost incurred for switching on the machine and a fixed reservation cost incurred for keeping the machine ‘On’. The system also includes a rechargeable battery. The customer has to determine when to process each operation within the time horizon so as to minimise total electricity consumption and operations postponement penalty costs. A dynamic programming solution is proposed and the complexity of the models is analysed. After examining several special cases of the model, the optimum times to charge and discharge the rechargeable battery are determined. A polynomial time algorithm for a special case of a single operation with uniform capacity is proposed.     

Multi-objective cell formation and production planning in dynamic virtual cellular manufacturing systems

This article presents a fuzzy goal programming-based approach for solving a multi-objective mathematical model of cell formation problem and production planning in a dynamic virtual cellular manufacturing system. In a dynamic environment, the product mix and part demand change over a planning horizon decomposed into several time periods. Thus, the cell formation done for one period may be no longer efficient for subsequent periods and hence reconfiguration of cells is required. Due to the variation of demand and necessity of reconfiguration of cells, the virtual cellular manufacturing (VCM) concept has been proposed by researchers to utilise the benefits of cellular manufacturing without reconfiguration charges. In a VCM system, machines, parts and workers are temporarily grouped for one period during which machines and workers of a group dedicatedly serve the parts of that group. The only difference of VCM with a real CM is that machines of the same group are not necessarily brought to a physical proximity in VCM. The virtual cells are created periodically depending on changes in demand volumes and mix, as new parts accumulate during a planning horizon. The major advantage of the proposed model is the consideration of demand and part mix variation over a multi-period planning horizon with worker flexibility. The aim is to minimise holding cost, backorder cost and exceptional elements in a cubic space of machine–part–worker incidence matrix. To illustrate the applicability of the proposed model, an example has been solved and computational results are presented.     

A CAPACITY PLANNING MODEL FOR A MULTI-PRODUCT FACILITY

A deterministic capacity planning model for a multi-product facility is analyzed to determine (he sizes to be expanded (or disposed of) in each period so as to supply the known demand for N products on time and to minimize the total cost incurred over a finite planning horizon of T periods. The model assumes that each capacity unit of the facility simultaneously serves a prespecified number of demand units of each product, that costs considered include capacity expansion costs, capacity disposal costs, and excess (idle) capacity holding costs, and all the associated cost functions are nondecreasing and concave, and that backlogging is not allowed. The structure of an optimal solution is characterized and then used in developing an efficient dynamic programming algorithm that finds optimal capacity planning policies. The required computational effort is a polynomial function of N and T.