Modeling and Optimizing of Strategic/Tactical Production Planning Problems

Satisfying customer demand at an optimal cost is the most important concern forthe high-level management of every company. This dissertation details i) thedevelopment of a strategic/tactical model for the distribution of productionresponsibilities to different sites/factories and ii) the design of an inter-area logistics flowensuring demand satisfaction, by consider the production capabilities of each site, whileminimizing the total costs of production output. A mixed integer program, which includesthe supply of raw materials and the distribution of finished products in the respectivemarkets, was proposed to manage this production problem. This concept encompassedtwo case studies: the first involved a scenario in which setup costs were identical (Case1); the second entailed setup costs that differed from product to product (Case 2) todetermine the optimal costs by understanding the role of the setup costs.This model also simultaneously automatically assigns a production job to aparticular factory and transports the finished goods among the sites, if the productioncosts at those sites are relatively higher than the transportation costs. CPLEX solver, usedfor the numerical analysis, determined that this proposed formulation could indeedmanage such a complex problem. These experiments were also used to predict the role ofFixed and Setup costs on the percentage of products transferred among the companies forpurposes of satisfying the demand