Two-level hierarchical framework for short-term production planning and scheduling

Abstract

This study aims to develop a two-level hierarchical production planning framework for a medium-sized Portuguese company that operates as a tier 2 supplier within the automotive production supply chain. The framework is designed to assist the decision-making process during the short-term planning of four progressive hydraulic presses used to produce cold-stamped parts for exhaust systems. The two hierarchical levels of the framework are: (i) a Mixed-Integer Linear Programming (MILP) model to determine the optimal quantities to be produced in a single machine while minimizing the total costs; and (ii) a dynamic production sequencing rule that defines the machine schedule based on three criteria that are relevant for the company. Both framework levels have been combined and implemented in Excel; in the first level, the MILP model is solved using the add-in Solver; then, the second level uses the optimal quantities to be produced as inputs to determine the production sequence through a mathematical procedure. The spreadsheet features a dashboard for intuitive use and presentation of results. The framework was validated by comparing it to a real plan executed by the company, and it was found that the plan proposed by the framework could save up to 20,6% of the total cost observed in reality. The framework requires a week-to-week rolling planning horizon in order to absorb uncertainties.