international joumal of

production
economics
ht. J. Production Economics 38 (1995) 269-279
A mathematical programming approach towards optimized
master production scheduling
Sydney C.K. Chu
Department of Mathematics, Universi@ of Hong Kong, Pokfilam Road, Hong Kong
Received 15 February 1994; accepted in revised form 9 January 1995
Abstract
The conventional material requirements planning (MRP) and master production scheduling (MPS) systems have
gained wide acceptance among production management and control. In this paper, we consider further an aggregate
optimization model for the usual MRP/MPS. That is, under a realistic assumption that the availability of material
accumulates over time, we seek an optimal production schedule for most profitable operation subject to various capacity
constraints. To this end, linear programming formulations are given for various levels of model complexity, ranging from
a basic product-mix problem to a global aggregate production planning problem. We examine stage-wise decomposition
from the point of view of practical computational feasibility and study the robustness of this decomposition. Finally,
simplified numerical results are provided as illustrations.
1. Introduction
The conventional (often automated) material re-
quirements planning (MRP) and master production
scheduling (MPS) systems have gained wide accept-
ance among production management and control
[ 11. These are generally regarded as accepted tools
of decision support systems (DSS). In this paper, we
consider further an aggregate optimization model
[2] for the usual MRP/MPS. That is, under a real-
istic assumption that the availability of component
parts (material) accumulates over time, we seek an
optimal production pattern (schedule) for most
profitable operation subject to various demand and
capacity constraints. To this end, linear program-
ming formulations are given for various levels of
model complexity, ranging from a basic (static)
product-mix problem to a global aggregate
(dynamic) production planning problem. We exam-
ine stage-wise decomposition from the point of
view of practical computational feasibility and
study the robustness of this decomposition. Two
sets of numerical results of a pilot study are re-
ported as illustrations.
I . I . Background
The background of this study is a complex high-
volume production management problem of pro-
ducing hundreds of products from hundreds of
individual components. As the scale of production
gears up, the problems of MRP (such as capacities)
become extremely complex for a manual system.
0925.5273/95/$09.50 0 1995 Elsevier Science B.V. All rights reserved
SSDI 0925-5273(95)00015-l
2-m S.C.K. Chullnt. J. Production Economics 38 (1995) 269-279
Structured databases of the management informa-
tion system (MIS) approach alleviates the problems
somewhat in having an overview of the total pic-
ture (such as inventory situation) but cannot point
to either critical area of material control for MRP
or vital decision of production scheduling for MPS.
The conventional DSS approach is an MRP system
which operates as follows. A material requirements
planning system consists of a set of logically related
procedures, decision rules, and records designed to
translate a master production schedule into time-
phased net requirements for each component in-
ventory item needed to implement this schedule.
A material requirements planning system replans
net requirements as a result of changes in either the
master production schedule, or inventory status, or
product composition. (Quotation excerpted from
Cl].) This standard approach attempts to give
a practicable and feasible solution to production
planning systems where the end products vie for the
limited production resources. A drawback of this
lack of modeling approach arises as it yields prac-
ticable results instead of optimal or near-
optimal solutions. This aspect has received some
attention from more recent works such as [3].
A certainly more serious problem, even for pres-
ent-day computerized MRP system is that its first
prerequisite is the existence ofan MPS [such that
it] presupposes that the MRP can, in its entirety, be
stated in bill of material (BOM) terms [l]. While
BOM relating various components for each specific
product is usually readily available, the need for
a feasible MPS as input data is indeed a very
demanding assumption in a complex multi-product
multi-component production environment [4].
There is therefore one fundamental improvement of
our aggregate optimization modeling in that the
MPS is generated as optimal or near-optimal
solutions instead of being an assumed starting
point. Hence replanning or parametric study for
a problem of a realistic size is more amenable to
subsequent analyses.
1.2. Related literatures
For its key role of an MRP system in a produc-
tion environment, many important works have
appeared in the literatures dealing with various
aspects (such as [S-7]) and proposing different
approaches (such as [S, 8, 91) for both an MRP
system itself and its kin of an MPS construction.
Regarding as traditionally significant consider-
ations include work toward a better understanding
of lead times in MRP systems such as [7]. Method-
ologies are suggested to aid in setting the level of
planned lead times upon examination of the effect
of lead times on backlog, order tardiness and
finished component inventory [7].
Characterization and theoretical consideration
aimed at eventually leading to specific solution
procedures include studies such as [6, lo]. The
property of triangularized basis (of linear programs
arising from certain MRP systems) allows efficient
adaptation of the Simplex method (with effective
decomposition for parallel computation) similar to
those for network problems [6]. Approaching from
the perspective of logic programming, the work of
[lo] emphasizes modeling enhancements of factors
such as quantity discounts and admits expert-sys-
tem like PROLOG implementation for com-
puterized MRP systems.
MPS systems have also been modeled as decision
problems [9], in which (customer required) changes
like order specifications and delivery dates causing
rescheduling is handled by a fuzzy sets approach as
a multigoal problem. In unit and small batch pro-
duction to customer order, this methodology is
flexible and practical [9],
Linear programming techniques are adopted [8]
for plan scheduling with due considerations for
various system characteristics such as finite capa-
city and realistic lead time (that is, not independent
of production lot-size). Another extensive work [S]
of mathematical programming approach of mixed
integer linear programming formulation with prob-
lem reduction has been carried out for capacity-
constrained MRP systems. While its stated main
emphasis is on calculating the required production
lead-times, thereby reducing in-process inventory,
a multi-stage production schedule is indeed com-
puted using a technique of product structure com-
pression to reduce the problem size. In contrast,
our present work exploits the model structure to
diminish the problem size for decomposed compu-
tations.
S.C.K. Chu/Int. J. Production Economics 38 (1995) 269-279 271
2. Model structure
2. I. Aggregate optimization model
We begin with the following product-mix model.
The products are indexed by i = 1, 2, . . . , I; their
component parts by k = 1,2, . . . , K, and the time
periods in our planning horizon by j = 1,2, . . . , J .
The product-mix relationship is described by
a non-negative integer-valued matrix commonly
referred to as the bill ofmaterial (BOM). Its element
bik defines the number of units of part k required in
the manufacturing of a unit of product i. Another
specification is the standard time hi required to
produce a unit of product i.
At this point of the modeling process, our basic
question is the following. What is an optimal
master production schedule (MPS) for various
products over our planning horizon? Let decision
variable xij stand for our planned production level
of product i in period j. Our objective is to maxi-
mize the total (potential) profit
7 Pi C xij9
j
where pi is the unit price (or contribution) for prod-
uct i, subject to the following restrictions on
(a) the supply skj of part k for period j,
(b) the total demand di for product i, and
(c) the labor resource gj (in units of standard
time) for period j.
Let us point out here that we generally regard the
quantities pi, skj, di and gj as parameters. We USe
these quantities as input to our model to arrive at
an MPS (xii), but we are also interested in noting
the limitations that these parameters impose on our
MPS (and hence the MRP) as well as the potential
opportunities they present in the total contribu-
tions. Another feature is the aggregating property
of constraints arising from (a). Since supply skj of
part k is available for use not only in period j, but
also in subsequent periods j + 1, j + 2, . . . , J , the
constraints addressing the supplies of parts neces-
sarily aggregate over periods. This leads to an ag-
gregate MRP problem, whose size renders a major
difficulty in numerical computation as we shall
discuss presently.
The mathematical model for our problem can be
stated as the following linear program (LP), which
will be referred to as the aggregate LP.
max 1 Pi C xij
i
j
subject t0 i C bikXij < i Skj
j=l i j=l
(t = 1, 2, . . . ) J ;k=l,2 ,..., k), (1)
T xij G di
(i = 1, 2, . . . ) I), (2)
7 hixij G gj
(j = 1, 2, . . . , J ), (3)
Xij 2 0
(i = 1, 2, . . . , I; j = 1, 2, . . . , J ).
We observe that rkj E xi bikXij is the usage require-
ment of part k in period j. Hence (1) simply states
that the aggregate usage of part k (over the first
t periods) should not exceed the corresponding
aggregate supply. The solutions (Xij) to the LP give
the MPS and (rkj) the MRP. Note that (di) here
represent potential demand ceiling estimates such
that (2) stipulates no over (total) production. We
shall refer to (1) and (2) as the aggregate constraints
in contrast to (3) being period-specific (that man-
power not carried over periods).
There is also a production leveling issue, for our
physical problem under consideration, that we
have a growing production planning situation. The
supplies of parts (Skj) and consequently the labor
resources (gj) are also increasing in time periods j.
Hence concern for production smoothing may lead
us to further consider additional constraints of the
following type, defining Xi0 E 0,
XiJ 2 Xi,j- 1
(i = 1, 2, . . . , I; j = 1, 2, . . . , J ),
which reflect the so-called ramp-up production
schedule. When included, smoother production
schedules are obtained. The disadvantages, how-
ever, include at least (i) too rigid as a requirement
for production level, and (ii) a large number of rows
in the resulting LP matrix. As an alternative, (lower
212
S.C.K. Chullnt. J . Production Economics 38 (1995) 269-279
and upper) bounding constraints can be used in
place of smoothing constraints [ll]. In this paper,
we shall not elaborate much on these (and other)
side-constraints.
Conceptually then, standard techniques such as
simplex methods or the more recent Karmarkar
algorithm are applicable. Unfortunately, the size of
this form of the mathematical model for a realistic
problem is formidable. It is an LP of J K + I + J
constraints in ZJ variables. A routine off-the-shelf
problem has around 100 products by 100 mixing
parts over a planning horizon of about 30 periods.
(We shall denote its size as Z/J/K = 100/30/100.)
This yields an LP of 3130 constraints in 3000 vari-
ables. To further complicate the issue, very often
a so-called approved vendor list (AVL) system re-
stricts certain products to using parts from only the
suppliers on the AVL. This implies that a part type
has to be sub-divided into several sub-types (even
though basically they are functionally identical),
thus pushing the number of different parts to well
over 500 (resulting in this case over 15000 con-
straints). A brute-force LP solution is beyond our
hardware and software capabilities, especially when
we intend to use the results as decision supports to
also analyze the various parameters in the context
of a strategic marketing. Take supplies (Skj) as an
example, from the LP solution (if and when it is
obtained) and its post-optimality sensitivity analy-
sis, we would identify the first level of critical item
(the most bottle-necked part-period in this case)
and its associated marginal benefit, relax this criti-
cal item to identify the next level of critical item and
its associated marginal benefit, and so on. Since we
envisage to analyze a high and open market, de-
mands (di) are also subject to such scrutinization.
Similarly pricings (pi) and labor resources (gj) can
be treated. To achieve any computational feasibil-
ity, the next step is then to look to stage-wise
decomposition into individual time periods.
2.2. Basic product-mix model
For one specific period_& the static product-mix
problem is to decide on the production level (Xii)
under the given BOM (bik), subject to parts avail-
ability constraints, total demand constraints and
labor constraint. This yields a simple LP model,
referred to as the product-mix LP
max 1 PiXij
subject to 1 bikXij d skj (k = 1, 2, . . , K),
i
Xij 6 di (i = 1, 2, . . . , I),
Xij ~ 0 (i = 1, 2, . . . ) I).
It can be interpreted as the very special case of
a single period (J = 1) aggregate LP defined pre-
viously. This product-mix LP has K + 1 structural
constraints in Z bounded variables. For the case of
Z = K = 100 considered before, its size is 101 x 100,
computationally well within our capability.
When viewed in the context of an aggregate
optimization model, a sequence of product-mix
LPs yields only a sequence of separate and inde-
pendent local (period-specific) solutions. Taken to-
gether, these solutions are naturally non-optimal or
even simply not regarded as feasible due to the
possibility of over-production. Interestingly, proper
linkup among a sequence of product-mix LPs
points to a promising myopic decomposition. The
approach is not, however, via the usual dynamic
programming (DP). A straight forward DP de-
composition is to use successive time periods as the
natural decomposing stages. State variables are
then the aggregate supplies of parts and remaining
demands. The computational effort for one stage is
that of a product-mix LP for each value of a state
variable. The DP decomposition formulation is
conceptually complete. However the total number
of product-mix LPs to solve amounts to the prod-
uct of J (periods) and
(a) (No. of computational grid points)K
(for parts),
(b) (No. of computational grid points)
(for demands).
This curse of dimensionality is all too obvious to
render this (K + Z dimensional) DP approach
computationally completely out of the question.
S.C.K. Chullnt. J . Production Economics 38 (1995) 269-279 213
Fortunately, there are special structures of the ag-
gregate model that we can indeed exploit.
2.3. Myopic decomposition
A simple idea of myopic decomposition is intro-
duced to treat the aggregate LP. Let the entire
planning horizon of J periods be divided into
a number of sub-horizons, each of L periods. Going
in a time-forward fashion, we consider the LP solu-
tion for the first sub-problem of L periods, the
unused parts as well as the unfilled demands are
carried into the second sub-problem of the next
L periods and so on. Thereby we need the com-
putational capacity of only an L-period model
compared to a J-period model. When L is taken to
be one, we have the approach of what we call the
myopic decomposition. The resulting MPS for all
J periods is myopically optimal. That is, it is a
collection of local optimal solutions and is gener-
ally inferior to a global optimal solution of the
(J-period) aggregate model. The key issue in this
approach is then how much inferior this sequence of
myopic LPs is. We shall provide some answers to
this question in the next section. Here we show
below the formulations for the first two sub-
problems.
(a) First L periods:
Set: 8 k, + skj (k E K;j = 1, 2, . . . , L)
d!
I
+ di (i E I)
Solve:
subject t0 5 c b&Xij d i S:f' (kE K),
j=l i j=l
j$l Xij < d! (iElI,
L
C hixij < gj
I
(j= 1,2,. . . , L),
Xij > 0 (iEI;jEJ).
(b) Second L periods:
(k E K),
(2)
skj +Skj
(kEK;j=L+2,...,2L),
di2
+ di
() - jglgij
(i E I).
Here (aij) is the optimal solution for the first L
periods.
Solve:
subject to j=F+ 1 Tbikxtj 2 jzf+ ,$ (k E K),
2L
C Xij < di2
j=L+ 1
Chtxij < gj (j = L + 1, . . . , 2L),
Xij > 0 (iEZ; j= L + 1,. . . ,2L).
Note that smoothing constraints of the type
Xi,j_ 1 < Xij can be added and similarly for any
bounding constraints. As L varies, there result
in different levels of aggregation/decomposition,
from L = 1 implying complete decomposition, to
L-period aggregate, to L = J for global non-
decomposition.
A crucial observation is that both the coefficient
matrix and the objective function coefficients re-
main unchanged from one L-period model to the
next. Computationally this means the unnecessity
of an LP solution from scratch as we move into the
next L periods. In fact, dual simplex is ideally suited
to rapidly generate optimal solutions for sub-
sequent L-period LPs. Conceptually, it forms the
foundation of optimality or near-optimality to
be discussed subsequently.
3. Aggregate optimality
As the computational feasibility of the myopic
decomposition has been ascertained, we now turn
214 S.C.K. Chullnt. J . Production Economics 38 (1995) 269-279
to the issue of its optimality or near-optimality.
The somewhat unexpected conclusion we shall be
able to draw is that if one considers the aggregate
model consisting only of the more difficult aggreg-
ate constraints (that is, (1) and (2) of the model
formulation) and relaxing the relatively simple
non-aggregate (period-specific) constraints (that is,
(3) of the model formulation), the resulting se-
quence of myopic LPs (each of which needs the
computational effort for that of a product-mix LP)
of the corresponding myopic decomposition yields
optimal local solutions that, when taken together,
optimizes the original aggregate LP. This means
that, for the specific MRP/MPS problem at hand, if
man-power constraints are not so tight that they
are always critically binding (as compared to prod-
uct-mix BOM and demand constraints), then my-
opically optimal solutions are globally optimal. To
see this, we first proceed to illustrate for the case of
J = 2. In matrix-vector notations, we define the
following.
(a) X(j) E (Xlj, X2j, . . . , XIj)T;
(b) B z (bik)T;
(C) S(j) G (Slj, S2j, . . . 7 SKj)T;
(d) d z (d,, d2, . . . , dJ T;
(4 p = (PI , ~2, . . . , pd.
Relaxing the labor constraints, the (Zperiod) ag-
gregate LP becomes the following.
max px + px2
subject to Bx < s(l),
Bx + BX2 < s(l) + s(2).
IX
< d,
Ix + Ix < d,
x(1), xW
2 0.
This can be compactly written as
(PO) = max{cTx + cTyJAx d b,
Ax + Ay G b + b2, (x, y) 2 0},
where
b2 E
p)
[ 1
0
x E xc) and y 3 xc).
Its myopic decomposition yields, for the first
period, the following:
max px
subject to Bx < s(l),
I x < d,
XC) > 0.
Or compactly,
(Pl) E max(cTxI,4x < b, x 2 O}.
For the next period, we get the following myopic
LP:
max pxC2
subject to Bx d s(l) + s() - B2,
I x < d - I ;z,
xC2) 2 0.
As before z?(l) denotes the optimal solution to (Pl).
Again it can be represented compactly as,
(P2) E max{cTyJAy < b + b2 - A& y 2 O}.
In general, the jth period myopic LP is given by,
with z? = 0,
(Pj) 5 max(cTxj)I Ax(j) < i (b - AR- ),
n=l
x(j) 3 01.
Theorem. (Aggregate Optimality). Consider the
following (aggregate) LP with A 2 0, b, b2 and
c > 0:
(P,) E max{cTx + cTyl Ax d b,
Ax + Ay < b + b2, (x, y) 3 01,
with optimal solution (x*, y*), and its decomposition
subprograms:
(Pl) E max{cTxIAx < b, x 2 0},
(P2) - max{cTy(Ay < b + b2 - A$ y 2 01,
S.C.K. Chullnt. J . Production Economics 38 (1995) 269-279 215
in which ~2 maximizes subprogram (PI) such that
2 < x* + y*. Then optimal solutions 2 to (PI) and
9 to (P2) constitute an optimal solution ($9) to (PO).
Proof. It is clear that (2, j?) satisfies (PO) as A2 < b,
Ai + Ay^ < b + b2 and (a, 9) > 0. Hence
CT@ + y^) < CT(X* + y*).
Let us verify that the regularity condition
i < x* + y* does not lead to a vacuous set of
decomposed solutions by way of the following.
We claim that there exists a feasible solution
(2, J) to the following (redistribution) LP:
(P) E max{cTX + cTyJAx < b,
Ay < b + b2 - AZ?, ji + y < x* + y*,
(X, Y) 2 O}.
We prove this claim via duality as follows. The
dual to (P) is given by
(D) z min{lb + ,C(b + b2 - A2)
+ 6(x* + y*)( AA + 01 2 cT,
jiA + al 2 cT, (I, ,2,6) 2 O}.
Also the dual to (PO) is given by
(Do) = min{Ab + p(b + b2)11A + pA 2 cT,
Let the optimal solution to (Do) be denoted by (A*,
p*) 3 0 (the existence of which is guaranteed by
that of (x*, y*)). We have
(A* + p*)A 2 cT and p*A 2 cT.
Hence if we take L = ,4* + p* and p = p*, then with
any ii 3 0, (2, ,!i, C) is a feasible solution to (D). Now
the objective function of(D) can be written as
(ib + jib2) + ,C(b - A,?) + 6(x* + y*) B 0
for any (1, A 6) > 0 (since A2 < b), hence bounded
below. This implies that (D) has a finite optimal
solution, which in turn guarantees by the strong
duality theorem the existence of a finite solution
(X, j) to (P). This concludes the proof of the claim.
Now consider a particular solution by taking
X = 9 and 3 = x* + y* - 2. This (X, J) 2 0 obvi-
ously satisfies both (Pl) and (P2). Thus cTX < eT.?
and cTY < cy*. Then as X + ~7 = x* + y*, we get
CT@* + y*) < CT(i + 9).
Hence equality holds and (a, y^) is also optimal for
(PO). cl
Corollary. Optimal solutions 2 t0 (Pj), j = 1,
2, . . . , J, constitute an optimal solution (f(j), j = 1,
2, . . . , J) to the J-period aggregate LP (PO) when-
ever the regularity condition CjI,f 18~ d xi= 1 x*(j)
is satisjied.
Proof. Forj = 1,2, . . . , J - 1, take X_(j) = z?(j). Let
J
,-(J) = cjx*(i) _ cj=r
l.?(j). We have, with 9(O) s 0,
J -1
ox- =
c
Ax*(j) _
c A$< c b
i
j= 1
j
_ c Ap- 1).
This is, XC-) > 0 satisfies (P,), implying that
cTXtJ) < cTicJ). Hence
c
,Txi3 = 1 cT&) s 1 cT,+j),
j j i
and equality holds as (i(j), j = 1
3
2
9 . . . 7
J ) satisfies
(PO). 0
The upshot of this result is plainly that if there
are no rigid period-specific side constraints (mean-
ing that redistributions of production levels are
permitted across time periods), a global optimal
solution is given by the myopic decomposition,
which is computationally feasible (and very fast),
requiring a drastically smaller amount of memory
space. In fact, we further argue that the omission of
man-power constraints in our case is not as damag-
ing as its first sight would seem to suggest. Our
approach has been to generate the solution MPS,
perform a material blow-up for the resulting MRP
which includes labor resources as one compon-
ent-part. We then check against the planned labor
resources and replan (as an usual MRP system
does) when necessary. A few small scale numerical
results (but using actual data) are reported in the
next section.
276 S.C.K. Chu/I nt. J . Production Economics 38 (1995) 269-279
4. Example of pilot study
As illustrations to some of the computations
involved in this myopic decomposition approach,
we provide in Tables 1 and 2 the computed MPS
and MRP, respectively, of a small scale pilot study
for the case of I /J /K = 6/8/T Four levels of de-
compositions are identified for the cases L = 1, 2,
4 and 8. The computational effort ranges from
complete decomposition (L = l), resulting in each
stage a product-mix LP of coefficient matrix of size
(K + I) x I = 11 x 6; to global aggregate LP
(L = 8), requiring a coefficient matrix of size
(JK + I) x IJ = 46 x 48. This is an instance that
none of the labor constraints is binding (or simply
regarded as no stage-specific side constraints). De-
compositions yield the same total optimal objective
function value as the global aggregate model. An-
other case of I /J /K = l/8/5 is reported in Tables 3
and 4 in a similar setup. Here all labor constraints
Table 1
Global and decomposed MPS (I /J /K = 6/8/5) with non-binding labor side constraints
I I J 1 2 3 4 5 6 I 8
Slack
demand
[L= l]
1
2
3
4
5
6
200.00 0. 00 0.00 0.00
0.00 15.45 20.50 32.95
0.00 0.00 7.00 5.00
0.00 151.36 123.50 123.86
133.33 66.67 0.00 0.00
25.00 37.50 7.50 0.00
Sales 13 166.67 9047.42 6094.50 6071.59
0.00 0.00 0.00 0.00 0
30.39 41.00 41.00 18.70 0
6.00 6.00 6.00 20.00 35
138.52 137.00 137.00 168.76 120
0.00 0.00 0.00 0.00 0
0.00 0.00 0.00 0.00 0
6290.21 7219.00 7219.00 8551.61 63 660
[L = 21
1
2
3
4
5
6
100.00 100.00 0.00 0.00
7.13 1.73 21.52 31.94
0.00 0.00 6.00 6.00
73.18 78.18 123.68 123.68
30.00 170.00 0.00 0.00
25.00 37.50 3.75 3.15
Sales 22 214.09 12 166.09
0. 00 0. 00 0.00 0.00 0
34.86 36.53 29.85 29.85 0
0.00 12.00 6.00 20.00 35
137.76 137.76 138.59 167.16 120
0.00 0.00 0.00 0.00 0
0.00 0.00 0.00 0.00 0
13509.21 15 770.61 63 660
[L = 43
1
2
3
4
5
6
50.00 50.00 50.00 50.00 0.00 0.00
11.58 18.56 18.56 20.22 32.11 32.77
0.00 0.00 0.00 12.00 0.00 9.00
19.06 106.56 106.56 106.56 138.18 138.18
50.00 50.00 50.00 50.00 0.00 0.00
17.50 17.50 17.50 17.50 0.00 0.00
Sales 34380.18
0.00 0.00
32.77 32.77
9.00 20.00
138.18 166.75
0.00 0.00
0.00 0.00
29 279.82
0
0
35
120
0
0
63 660
[L = 81
1
2
3
4
5
6
25.00 25.00 25.00 25.00 25.00 25.ti 25.00 25.00 0
15.33 22.33 22.33 27.28 21.28 28.48 28.48 28.48 0
0.00 0.00 0.00 7.50 7.50 7.50 7.50 20.00 35
88.17 115.50 115.50 115.50 115.50 136.05 136.05 157.12 120
25.00 25.00 25.00 25.00 25.00 25.00 25.00 25.00 0
8.75 8.75 8.75 8.75 8.75 8.75 8.75 8.75 0
Sales 63 660
S.C.K. ChulInt. J . Production Economics 38 (1995) 269-279 211
Table 2
Decomposed MRP (I /J /K = 6/8/5) with non-binding labor side constraints
WJ
[L = l]
1
2
3
4
5
1 2 3 4 5 6 7 8
1500.00 2000.00 2000.00 2500.00 2500.00 3000.00 3000.00 2610.00
383.33 1216.67 900.00 900.00 1000.00 1000.00 1000.00 1200.00
0.00 108.18 185.50 260.68 248.16 323.00 323.00 250.88
0.00 0.00 1.00 5.00 6.00 6.00 6.00 20.00
100.00 150.00 93.00 45.00 54.00 54.00 54.00 180.00
Parts
excess
1390
0
1100
0
120
Table 3
Global and decomposed MPS (l/J /K = l/8/5) with binding labor side constraints
IIJ 1 2 3 4 5 6 7 8
Slack
demand
[L = l]
1
2
3
4
5
6
7
0. 00 0.00 0.00 0.00 5.94 21.23 12.83 0.00 0
14.64 10.15 21.61 20.59 0.00 0.00 0.00 0.00 28.01
0.10 2.00 3.00 4.00 4.00 2.41 5.53 10.00 13.90
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 850
146.21 203.19 0.00 0.00 0.00 0.00 0.00 0.00 0
8.08 3.36 35.61 31.94 14.96 0.00 0.00 0.00 0
0.00 0.00 0.00 0.00 11.81 0.00 5.94 22.34 19.91
Sales 9682.84 11696.04 1831.35 8253.31 6392.80 4911.05 4716.87 5132.98 59 223
[L = 23
1
2
3
4
5
6
1
0.00 0.00 0.00 0.00 12.10 12.10 1.30 7.30 0
12.52 12.52 21.10 21.10 0.00 0.00 0.00 0.00 21.17
0.10 2.00 1.00 6.00 1.50 6.50 2.19 11.81 13.90
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 850
156.02 193.98 0.00 0.00 0.00 0.00 0.00 0.00 0
4.23 4.23 36.80 36.80 8.96 8.96 0.00 0.00 0
0.00 0.00 0.00 0.00 6.07 6.01 13.85 13.85 20.16
Sales 20 942.43 16084.66 11698.51 10412.07 59 198
[L = 43
1
2
3
4
5
6
7
0.00 0.00 0.00 0.00 10.00 10.00 10.00 10.00 0
16.15 16.15 16.15 16.15 0.00 0.00 0.00 0.00 28.01
0.10 2.00 3.00 4.00 3.33 4.33 4.33 10.00 13.90
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 850
55.11 13.83 103.83 111.17 0.00 0.00 0.00 0.00 0
21.26 21.26 21.26 21.26 3.14 3.14 3.14 3.74 0
0.00 0.00 0.00 0.00 9.28 9.28 9.28 12.23 19.91
Sales 37463.54 21 159.69 59 223
[L = 81
1
2
3
4
5
6
7
3.18 3.18 3.18 3.18 5.25 6.29 1.32 8.39 0
5.55 5.55 5.55 5.55 5.55 5.55 5.55 5.55 50.56
0.10 0.11 0.11 5.11 5.17 5.11 5.11 10.00 13.90
1.05 3.34 3.34 3.34 3.34 3.34 3.34 3.34 825.60
0.00 21.43 54.16 54.16 54.16 54.16 54.16 54.76 0
12.50 12.50 12.50 12.50 12.50 12.50 12.50 12.50 0
1.50 1.50 1.50 7.50 1.50 1.50 1.50 1.50 0
Sales 61236
278
Table 4
S.C.K. Chu JInt. J. Production Economics 38 (1995) 269-279
Decomposed MRP (l/J/K = 7/8/5) with binding labor side constraints
1 2 3 4 5 6 7 8
Parts
excess
[L = l]
1 1177.00 1182.00 1285.00 1028.00 1028.00 1063.00 1063.00 1400.00 0
2 177.00 220.66 92.95 96.47 65.33 0.00 17.82 67.02 1200.8
3 103.06 83.05 169.28 168.12 71.23 14.84 56.93 149.36 1984.1
4 0.10 2.00 3.00 4.00 4.00 2.47 5.53 10.00 0
5 33.21 31.44 169.67 187.76 143.35 192.07 152.41 90.00 450.1
Labor 675.00 750.00 850.00 900.00 1000.00 1050.00 863.80 8 10.40
except for the last two stages are binding and we see
the effect of about 3% below the global optimal
value as resulting from various decompositions.
From the numerical values in Table 1, we can see
that while total profit (or sales contribution) remains
the same, the MPSs themselves are indeed sensitive to
decompositions. Ad hoc production levels smoothing
has been attempted (in another earlier study [l 11) on
an MPS produced as myopic optimal solutions. The
idea is to come up with a unimodal type of pro-
duction levels over all J periods while adhering
strictly to supply availabilities and demand con-
straints. This has resulted in apparently better MPS
but rather un-smoothed man-power requirements.
The advantages of myopic decomposition in-
clude extremely rapid computation time and reduc-
ing an otherwise intractable aggregate MRP/MPS
optimization model to yield to LP solutions. It
enables us to routinely obtain solutions for
problems in the order of 100/30/100 even on
micro-computers. In fact, total profit is relatively
insensitive to decomposition. Even when period-
specific side constraints, such as tight labor re-
sources situation, are present, our computational
experience up to this day has revealed an upper
bound of about 3.5% below global optimal values
[ 111. Thus drawbacks of myopic decomposition for
MRP/MPS optimization must be carefully
weighed against computational feasibility or in-
feasibility of non-decomposition.
5. Concluding remarks
While our present work is in similar spirits of
optimized production schedule such as [S, 33, it
also has rather positive economic and managerial
implications subsequent to the illustrative pilot
study. Specifically, there are two production man-
agement issues pending for such quantitative
solutions, namely, the inventory acquisition and
control of component parts, and the acceptance
decisions on planning for finished goods produc-
tion. On the first, the advance and time-phased
knowledge provided by the MRP blow-up from an
optimized MPS is extremely vital for the material
controller (the so-called buyer). This is especially
crucial in a (sellers) market of possible future, albeit
occasional, shortage of certain IC chips. On the
second, it has always been a difficult balancing
decision between the marketing and production
managers on what and when, and indeed some-
times if at all, to promise firm delivery of orders.
The problem becomes particularly severe when
product varieties and hierarchies are constantly
increasing in number and level, respectively. With-
out a computerized system for such decision sup-
port, feasibility of a planned MPS (a burning issue
discussed in study such as [4]) actually takes center
stage over ideal profit maximization or cost minim-
ization. In this very regard, such use of our practical
and easy-to-implement approach towards an opti-
mized (thus in particular feasible) MPS provides
information welcomed by not only the production,
but also other as well as higher level, management.
Having stated the strength of our approach, it
is necessary to discuss its weakness and to caution
its use in an actual implementation. Our model,
like many other production planning models, is
lacking in its total (computerized) integration of
manufacturing. This is true in terms of hardware
convolution of production machinery and software
S.C.K. Chu J I nt. J . Production Economics 38 (1995) 269-279 279
integration of inter-departmental (advertising, mar-
keting, sales and production) decision making for
a global objective and company goal. Our model is
capable of generating decision supports for many
people but their co-operation and combined effort
is assumed in getting together for the models con-
struction (in terms of its parameters, coefficients
and constrains to be taken or not taken into ac-
count) to reflect the correctly balanced scenario.
Finally, we mention in passing that more recent
work on MPS has shifted some attention to the
compared evaluation of make-to-order (or just-in-
time) to make-to-stock (or production planning
and scheduling). Attempts are also made to inte-
grate factors such as marketing [ 123 and customer
enquiries in cases of make-to-order companies [ 131.
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