Optimal Process/Reprocess Production Mix for Multiple Orders in Multiple Periods

Abstract

Production planning, which allows the manufacturer to efficiently manage all production activities, is a major issue in manufacturing/processing industries. This study considers a medium-term production planning problem, in which a producer receives several periodic orders from multiple retailers at the beginning of the planning horizon. Given the limit in production capacity, the producer must reject some orders under the profit maximization principle, while considering multiple and inseparable orders, backlogging policy, and capacity limitation of the plant. Therefore, the producer faces two issues, namely, (a) which orders the producer should accept, and (b) how to allocate the products to the retailers.To solve these problems, we propose a multiple-period production plan in the form of an integer program. Theoretical development with numerical examples is provided. The results have shown that this study can help producers deal with a more realistic environment and derive useful product delivery information.