Chapter 8: Planning and Scheduling in Supply Chains

Phan Nguyen Ky Phuc

February 15, 2019

Contents

1 Introduction 1

2 Frameworks for Planning and Scheduling in Supply Chains 2

3 A Medium Term Planning Model for a Supply Chain 2

1 Introduction

This chapter basically embeds medium term planning models. A medium term production
planning model typically optimizes several consecutive stages in a supply chain (i.e., a multi
echelon model), with each stage having one or more facilities. Such a model is designed to
allocate the production of the different products to the various facilities in each time period,
while taking into account inventory holding costs and transportation costs.
Clearly, planning models differ from scheduling models in a number of ways.

• First, planning models often cover multiple stages and optimize over a medium term
horizon, whereas scheduling models are usually designed for a single stage (or facility)
and optimize over a short term horizon.

• Second, planning models use more aggregate information, whereas scheduling models
use more detailed information.

• Third, the objective of planning model is typically to minimize cost objective with
the monetary unit while the objective of scheduling model is typically to minimize the
completion times of the jobs with the time unit

1
Ho Chi Minh City International University Scheduling
Industrial Systems Engineering Department Lecturer: Phan Nguyen Ky Phuc

• Nevertheless, even though there are fundamental differences between these two types of
models, they often have to be incorporated into a single framework, share information,
and interact extensively with one another.

2 Frameworks for Planning and Scheduling in Supply

Chains
• Planning and scheduling procedures in supply chains are typically used in several
phases: a first phase involves a multi stage medium term planning process (using
aggregate data) and a subsequent phase performs a short term detailed scheduling at
each one of those stages separately.

• Typically, whenever a planning procedure has been applied and the results have become
available, each facility can apply its scheduling procedures.

• However, scheduling procedures are usually applied more frequently than planning
procedures. Each facility in every one of these stages has its own detailed scheduling
issues to deal with

• The output of the medium term planning process serves as an input to the detailed
(short term) scheduling process. The detailed scheduling problems typically attempt
to optimize each stage and each facility separately.

• In the scheduling phase of the optimization process, the process is partitioned according
to: the different stages and facilities and the different time periods.

• A scheduling module may cover only a relatively short time horizon (e.g., one month),
whereas the planning module may cover a longer time horizon (e.g., six months).
After the schedule has been fixed for the first month (fixing the schedule for this
month requires some input from the planning module), the planning module does not
consider this first month any more; it assumes the schedule for the first month to be
fixed. However, the planning module still tries to optimize the second up to the sixth
month.

• A planning and scheduling framework for a supply chain typically must have a mech-
anism that allows feedback from a scheduling module to the planning module

3 A Medium Term Planning Model for a Supply Chain

It is better to analyze the problem under the form

Entity type

08: Planning and Scheduling in Supply Chains

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Ho Chi Minh City International University Scheduling
Industrial Systems Engineering Department Lecturer: Phan Nguyen Ky Phuc

Figure 1: System With 3 Stages

• Product

• Customer

• Factory

• DC

• Period

Given parameters

• Production time

• Production cost

• Week holding cost

• Demand

• Penalty cost

• Manufacturing capacity

Decision Variables
To define the decision variable, it is essential to consider which activities will affect the
objective function value

• Manufacturing quantity

• Moving quantity

• Holding quantity

Based on these observations, the problem can be modeled as:

Index

08: Planning and Scheduling in Supply Chains

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Ho Chi Minh City International University Scheduling
Industrial Systems Engineering Department Lecturer: Phan Nguyen Ky Phuc

• t index of time t = 1...T

• j index of product j = 1...J

• i index of factory i = 1...I

• k index of customer k = 1...K

• d index of distribution center d = 1...D

Parameters

• cji be the cost to manufacture one unit of j at factory i

• pji be the time to manufacture one unit of j at factory i

• fid1 be the transportation cost from factory i to DC d

2
• fik be the transportation cost from factory i to customer k
3
• fdk be the transportation cost from DC d to customer k
1
• U Bjid maximum quantity of product j can transport form factory i to DC d
1
• LBjid minimum quantity of product j can transport form factory i to DC d
2
• U Bjik maximum quantity of product j can transport form factory i to customer k
2
• LBjik minimum quantity of product j can transport form factory i to customer k
3
• U Bjdk maximum quantity of product j can transport form DC d to customer k
3
• LBjdk minimum quantity of product j can transport form DC d to customer k

• h the weekly holding (storage) cost in the DC for one unit of any type.
2
• wjd the tardiness cost per unit per week for an order of product j that arrive late at
the DC d.
3
• wjk the tardiness cost per unit per week for an order of product j that arrive late at
the customer k.

• ψj the penalty for never delivering one unit of product j

2
• Djdt demand of product j at DC center d at week t
3
• Djkt demand of product j at customer k at week t

• It takes one week to transport between any two points in the system.

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Ho Chi Minh City International University Scheduling
Industrial Systems Engineering Department Lecturer: Phan Nguyen Ky Phuc

Decision variables

• xjit number of units of family j produced at factory i during week t.

1
• yjidt number of units of family j transported from factory i to the DC d in week t.
2
• yjikt number of units of family j transported from factory i to the customer k in week
t.
3
• yjdkt number of units of family j transported from DC d to the customer k in week t.

• zjdt the inventory on hand of product j at DC d at the end of week t

2
• vjdt number of units of product j that are tardy (have not yet arrived) at the DCd in
week t.
3
• vjkt number of units of product j that are tardy (have not yet arrived) at the customer
k at time t.

Objective function

I X
X I X
T J X
X I X T
D X J X
X I X T
K X
min Z = cji xjit + fid1 yjidt
1
+ 2 2
fik yjikt
j=1 i=1 t=1 j=1 i=1 d=1 t=1 j=1 i=1 k=1 t=1
J X
X T
K X
D X J X
X T
D X J X
X T
D X
3 3 2 2
+ fdk yjdkt + h zjdt + wjd vjdt
j=1 d=1 k=1 t=1 j=1 d=1 t=1 j=1 d=1 t=1
J X
X T
K X
3 3
+ wjk vjkt
j=1 k=1 t=1

Capacity constraint:
J
X
pji xjit ≤ 24 × 7, ∀i, t
j=1

Flow quantity constraints:

1 1
yjidt ≤ U Bjid , ∀j, i, d, t
1 1
yjidt ≥ LBjid , ∀j, i, d, t
2 2
yjikt ≤ U Bjik , ∀j, i, k, t
2 2
yjikt ≥ LBjik , ∀j, i, k, t
3 3
yjdkt ≤ U Bjdk , ∀j, d, k, t
3 3
yjdkt ≥ LBjdk , ∀j, d, k, t

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Ho Chi Minh City International University Scheduling
Industrial Systems Engineering Department Lecturer: Phan Nguyen Ky Phuc

Balance flow quantity constraints:

D
X K
X
1 2
xjit = yjidt + yjikt , ∀j, i, t
d=1 k=1

Demand constraints:
I
X D
X
2 3 3 2
yjikt + yjdkt ≤ Djk,t+1 + vjkt , ∀j, k, t
i=1 d=1

The flow of quantity from DC center to customer

K
X I
X
3 1
yjdkt ≤ yjid,t−1 + zjd,t−1 , ∀j, d, t
k=1 i=1

The total flow quantity of product j from DC d to customer at t = 1 must be smaller than
the inventory on hand at this DC center at t = 0

K
X
3
yjdk1 ≤ zjd0 , ∀j, d
k=1

Inventory constraints for the DC center

K
!
X
3 2
zjd1 = max 0, zjd0 − yjdk1 − Djd1 ∀j, d
k=1
I K
!
X X
1 3 2 2
zjdt = max 0, yjid,t−1 + zjd,t−1 − yjdkt − Djd1t − vjdt ∀j, d, t
i=1 k=1

constraints regarding number of jobs tardy and number of jobs not delivered:

2 2


vjd1 = max 0, Djd1 − zjd0 ∀j, d
K I
!
X X
2 2 2 3 1
vjdt = max 0, Djdt + vjd,t−1 + yjdkt − zjdt − yjid,t−1 ∀j, d, t
k=1 i=1
3 3


vjk1 = max 0, Djk1 ∀j, k
D I
!
X X
3 3 3 3 2
vjkt = max 0, Djkt + vjk,t−1 − yjdk,t−1 − yjik,t−1 ∀j, k, t
d=1 i=1

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