DESIGN OF THE AGGREGATE MODEL IN A HIERARCHICAL PRODUCTION PLANNING SYSTEM

When applying an aggregate approach to production planning the system has a natural hierarchical structure. The solution of the aggregate problem is disaggregated on the lower level by changing the objective functions and the constraints in the more detailed short range problems. Often the aggregate model is formulated as a linear program since non-linear costs like set-up costs instead can be recognized on the lower level. The traditional formulation of the aggregate model has several disadvantages, especially in case production and inventory on the lower level are controlled by separate subsystems. Therefore an alternative model with the following properties is formulated: • The production in different machine groups as well as the flow of orders for different product groups are obtained from the model. These results constitute relevant inputs into the lower level production planning on the one hand and inventory control on the other. • The work-in-progress is represented explicitly. • The material requirements planning is part of the model. • If only a small number of seasonal patterns need to be considered the size of our model will be very small compared to the traditional model. © 1979.