Production Planning and Scheduling

Introduction to quantitative models and methods for the planning of production and order operations in manufacturing firms. The topics include forecasting, aggregate planning, inventory control, material requirements planning, and production operations scheduling.

Objectives

The aim of the course is to introduce students to classical methods for the design, planning and control of supply and production operations in manufacturing firms. Through the prism of quantitative analysis of production-inventory system models, students learn methods for approaching and solving typical problems at different levels of the planning hierarchy. After the completion of the course, students should to be able to understand the effect of important characteristics of production-inventory systems, such as fixed/variable order/production costs, inventory holding/stockout costs, production capacity, number of products, variability and randomness of demand, on the optimal decision variables and performance of these systems.

Prerequisites

Linear programming Applied probability theory

Syllabus

Forecasting. Forecast characteristics. Quantitative forecasting methods: Regression methods, time-series methods (moving average, exponential smoothing methods for stationary series and series with trend and/or seasonality). Introduction to ARIMA forecasting models. Aggregate production planning. Prototype example. Zero Inventory plan. Constant workforce plan. Formulating and solving aggregate production planning problems as Linear Programming problems. Inventory control under constant demand. Economic Order Quantity (EOQ) model. Extension of EOQ to quantity discounts and resource-constrained multiple-product systems. Extension of EOQ to finite production rate and multiple products: Economic Lot Sizing Problem (ELSP). Power-of-two lot-sizing policies. Inventory control under known time-varying demand. Dynamic Lot Sizing Problem (DLSP). Heuristic DLSP strategies (fixed order quantity, fixed order period, part-period balancing, Silver-Meal heuristic). Optimal DLSP strategy (Wagner-Whitin). Extension of DLSP to capacity constraints. Inventory control under uncertain demand. The newsvendor problem and its extension to multiple periods. The reorder point and quantity model with backorders/lost sales. Material Requirements Planning (MRP). Basic MRP procedure. Production scheduling. Myopic operations scheduling rules. Introduction to operations sequencing theory for a single machine. Optimal sequencing of multiple jobs on two machines in series and extension to three machines. Optimal sequencing of two jobs on multiple machines in series.