Optimal Production Strategies for Plants with Multiple Shutdown Levels and Multiple Production Lines

Abstract

When demand is less than plant capacity, aggregate production and demand can be matched by (1) throttling production at a rate equal to demand or (2) producing at capacity production rates and shutting down periodically to reduce inventories. In some plants several levels of shutdown are feasible. For example, a first level of shutdown may involve only equipment, while a second level of shutdown may involve shutting down equipment and laying off workers. Moreover, when a plant has multiple production lines, each line can be throttled or periodically shut down. This paper uses classical optimization techniques to develop optimal production strategies for plants with multiple shutdown levels and multiple, identical production lines.