OSE seminar 2011
Production planning and optimization – methods to improve efficiency

April 25, 2014

Production planning through optimization is an important factor to success for many companies today. In order to survive in the tough competitive climate with small margins in revenues companies need to operate at optimal, or at least near optimal, levels. Production planning and optimization can, regardless of industry segment, contribute to significant improvements in production efficiency.

Researchers have proven that detailed production plans are essential for attaining overall excellence in Supply Chain Management (Björk, 2006). One key element in creating successful optimization application is detailed mathematical modeling. Modeling a production process is a balancing act of including all the necessary details while excluding the unimportant ones.

The complexity of modern production facilities makes it almost impossible to achieve these goals “by hand”. Ever more companies rely on optimization application tailor-made for their specific needs. While general models can be useful for long term planning an especially design application is essential for obtaining good results in operative use.

The goal is to create and compare, production planning and optimization application used in different production industry segments. The objective is to evaluate support tools for production planning as well as automated planning systems. Even though companies operate in different environments many of the optimization aspects are the same. Many real life problems become large scale optimization problems not easily solved in feasible time. To overcome this challenge intelligent design choices and careful modeling are essential. A promising approach is to combine optimization methods from both the heuristic and deterministic domain to create new powerful hybrid optimization applications. The objective is to create applications capable of producing excellent solutions fast, without loosing precision.

Production optimization will play a significant role in the future of production industry. As the computation speed in computers increase so will the size of optimization problems. Deterministic methods will always be the basis of optimization but in order to keep up with the demands form the industry new methods need to be constructed. The concept of pairing several methods into new hybrid methods is an interesting field of research that can offer solutions to previously unsolvable problems.

Some references

Björk K-M., 2006. Supply Chain Efficiency with Some Forest Industry Improvements. PhD thesis (Business Administration), Åbo Akademi University, ISBN 952-12-1782-0.

Russel R., Chiang W. & Zepeda D., 2007. Integrating multi-product production and distribution in newspaper logistics. Computers and Operations Research, AIP.