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An iterative approach to item-level tactical production and inventory planning


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  • Tian, Feng
  • Willems, Sean P.
  • Kempf, Karl G.
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    In this paper, we propose an iterative approach to jointly solve the problems of tactical safety stock placement and tactical production planning. These problems have traditionally been solved in isolation, even though both problems operate in the same decision making space and the outputs of one naturally serve as the inputs to the other. For simple supply chain network structures, two stages and one or many products, we provide sufficient conditions to guarantee the iteration algorithm's termination. Through examples, we show how the algorithm works and prove its applicability on a realistic industrial-scale problem.

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    Bibliographic Info

    Article provided by Elsevier in its journal International Journal of Production Economics.

    Volume (Year): 133 (2011)
    Issue (Month): 1 (September)
    Pages: 439-450

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    Handle: RePEc:eee:proeco:v:133:y:2011:i:1:p:439-450

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    Keywords: Inventory Production Hierarchical planning Supply chain management;


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    1. Kim, Bokang & Kim, Sooyoung, 2001. "Extended model for a hybrid production planning approach," International Journal of Production Economics, Elsevier, vol. 73(2), pages 165-173, September.
    2. Peter J. Billington & John O. McClain & L. Joseph Thomas, 1983. "Mathematical Programming Approaches to Capacity-Constrained MRP Systems: Review, Formulation and Problem Reduction," Management Science, INFORMS, vol. 29(10), pages 1126-1141, October.
    3. Gfrerer, Helmut & Zapfel, Gunther, 1995. "Hierarchical model for production planning in the case of uncertain demand," European Journal of Operational Research, Elsevier, vol. 86(1), pages 142-161, October.
    4. Spitter, J. M. & Hurkens, C. A. J. & de Kok, A. G. & Lenstra, J. K. & Negenman, E. G., 2005. "Linear programming models with planned lead times for supply chain operations planning," European Journal of Operational Research, Elsevier, vol. 163(3), pages 706-720, June.
    5. Fleischmann, B. & Meyr, H., 2003. "Planning Hierarchy, Modeling and Advanced Planning Systems," Publications of Darmstadt Technical University, Institute for Business Studies (BWL) 36714, Darmstadt Technical University, Department of Business Administration, Economics and Law, Institute for Business Studies (BWL).
    6. Jornsten, Kurt & Leisten, Rainer, 1995. "Decomposition and iterative aggregation in hierarchical and decentralised planning structures," European Journal of Operational Research, Elsevier, vol. 86(1), pages 120-141, October.
    7. Byrne, M. D. & Bakir, M. A., 1999. "Production planning using a hybrid simulation - analytical approach," International Journal of Production Economics, Elsevier, vol. 59(1-3), pages 305-311, March.
    8. Fandel, Gunter & Stammen-Hegene, Cathrin, 2006. "Simultaneous lot sizing and scheduling for multi-product multi-level production," International Journal of Production Economics, Elsevier, vol. 104(2), pages 308-316, December.
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