Interaction between production scheduling and dispatching: an experimental study in an MRP frame work

Abstract

Operations Planning seeks to determine the best utilization of existing resources that will help in achieving the objectives set for Operations Management. It takes the production system as given and attempts to suggest, in detail, the allocation of resources to tasks in order to achieve the objectives. For various reasons, the operations planning problem, traditionally, has been partitioned into several sub problems, namely, Aggregate Production Scheduling, Master Production Scheduling, Production Scheduling, and Dispatching. So far these sub problems, both in literature and practice, are being solved independently and sequentially. It is hypothesized that such a sequential approach fails to capture the interdependence among the sub problems and hence may result in suboptimal solutions. The present work reviewed the literature and practice to assess the awareness of the hypothesized interdependence and the efforts, if any, made so far to account for the interdependence in the solution procedure. An experiment is conducted to study the hypothesized interdependence between Production Scheduling and Dispatching in a simulated job shop using Material Requirements Planning system. Lot size rule, planned lead time, dispatching rule are treated as decision variables in this study are tardiness, average inventory, and total cost (i.e. sum of setup cost and inventory carrying cost).

The major findings are:

a) Lot size, planned lead time and dispatching decisions influence each other and hence cannot be taken independently. b) Dispatching decision is not so important as the lot size and planned lead time decisions are. c) Lot sizing among the three decisions appears to be the most important decision. d) Interaction among the operations planning decisions persists for different capacity utilization levels, seasonality in demand, and product structures.

A new method of lot sizing is developed that includes tardiness in the objective function and is shown to reduce tardiness while marginally affecting total cost. It is also shown that this method is useful in investment decisions to reduce setup cost. The findings of this study suggest that a simulator similar to the one developed here should be used to design Production Scheduling System and Dispatching System.