Rolling horizon heuristics for production planning and set-up scheduling with backlogs and error-prone demand forecasts

Abstract

Three families of models and fast heuristic methods are developed for identifying a production plan and immediate set-up schedule for a manufacturing line with changeover times. The initial model is exact, but is optimally solvable only for very short planning horizons. A second modelling and solution method optimizes production one period at a time, first in a backward pass to identify target inventory levels, and then in a forward pass to build up these target inventories. Finally, a third method plans set-ups and lots on a period-by-period basis, estimating the capacity usage of future set-ups. All three methods are first tested under static conditions and then on a rolling horizon basis with differing degrees of demand forecast accuracy, tightness of capacity and length of horizon. Computational experiments confirm that even under great forecasting uncertainty the planning horizon should extend beyond the time at which the horizon is rolled forward and the forecasts updated. Tests also show that the degree of capacity tightness and horizon length affects which approximate models and methods are most successful. The degree of forecast error appears to have limited impact on the planning horizon to be used and relative performance of the models.

Keywords:

• Production planning
• Set-ups
• Demand forecasts
• Rolling horizons
• Heuristics

Acknowledgements

I would like to thank the referees for their valuable and constructive feedback, resulting in a better paper.

Alistair Clark is a Principal Lecturer in Operational Research (OR) in the Faculty of Computing, Engineering and Mathematical Sciences at the University of the West of England, Bristol. He was formerly a Production Systems Specialist at UniSoma (an OR consulting and systems development company in Brazil), an academic adviser at IBM's Latin American Institute of Technology, an analyst in the UK government OR Service, a lecturer at several UK universities, and a VSO volunteer teacher in Wa, Ghana. Alistair has led production planning and scheduling consulting and systems development assignments for Polyenka, Tilibra and Thomson Consumer Electronics in Brazil, and Matthew Clark Brands in the UK, among other companies. He belongs to the UK Operational Research Society (ORS) on whose Council he represents the Western region of England. He is also the UK representative on the Council of EURO – the Association of European Operational Research Societies.

Notes

Email: [email protected]

Additional information

Notes on contributors

Alistair R. Clark

Email: [email protected]