Lecture 27 Supply Chain Scheduling 1 J Christopher

Lecture 27: Supply Chain Scheduling 1 © J. Christopher Beck 2005 1

Outline n The Beer Chain n n Carlsberg Denmark Supply Chain Management Supply Chain Introduction n Strategic, Tactical, Operational Planning vs. Scheduling Hierarchical Decomposition © J. Christopher Beck 2005 2

Supply Chain Scheduling © J. Christopher Beck 2005 3

Carlsberg n n Sells many different brands of beer Sells many different “formats” n n bottles, cans, kegs 6 -pack, 12, 24 © J. Christopher Beck 2005 4

Carlsberg Supply Chain Brewery 1 4 production lines Distribution Centre Brewery 2 2 production lines Warehouses Stage 1 © J. Christopher Beck 2005 Stage 2 Stage 3 5

Stage 1 Scheduling n 3 production steps on each line n n brewing (and fermentation) filtering filling – bottling/packaging All are resource constrained but filling is usually the bottleneck n Filling operation has different costs and processing times © J. Christopher Beck 2005 6

Stage 1 Scheduling n n All orders have fixed “lot size” Products are divided into A, B, C categories n n n A – high runners – a lot of demand C – specialty beers: more expensive, less demand Sequence dependent changeovers! © J. Christopher Beck 2005 7

Stage 1 Transportation n n Either to DC or direct to a warehouse Different lot size constraints (truck capacity) © J. Christopher Beck 2005 8

Carlsberg Supply Chain Brewery 1 4 production lines Distribution Centre Brewery 2 2 production lines Warehouses Stage 1 © J. Christopher Beck 2005 Stage 2 Stage 3 9

Stage 2 & 3 Optimization n Placement of pallets at DC and warehouses Transportation to customers n vehicle routing © J. Christopher Beck 2005 10

Scheduling Process n Medium term: 12 weeks n n given demand forecasts for products 3 MIP models solved sequentially n Costs: production, storage (at brewery, DC, warehouse), transportation, tardiness, nondelivery penalty, and violation of safety stock Each MIP is composed of 5 -10 subproblems based on products © J. Christopher Beck 2005 n 11

Safety Stock n One goal is customer service n n n Usually achieved by maintaining inventory at DC and warehouses Minimum inventory levels = safety stock A lot of safely stock good customer service, but also high inventory costs! © J. Christopher Beck 2005 12

Short Term Scheduling n Based on medium term schedule, short term scheduling plans the actual production for one week n n n More detailed model of resource (i. e. , sequence dependent setup costs) Use genetic algorithm or constraint programming Transportation scheduling © J. Christopher Beck 2005 13

Overall Process n Medium term plan is re-done every day using up-to-date information n n takes 10 to 12 hours Then short term scheduling is re-done © J. Christopher Beck 2005 14

Comments n n This is not a distributed scheduling solution! Decompositions are crucial n n n medium term/short term product-based transportation scheduling decoupled from production scheduling © J. Christopher Beck 2005 15

Supply Chain Optimization n Assume we are interested in minimizing the cost of the entire supply chain n n Individual participants will cooperate to minimize overall cost How many things are wrong with this assumption? © J. Christopher Beck 2005 16

Levels & Horizons Level Horizon Strategic 1 – 5 years Tactical 2 – 6 months Sourcing, distribution, orders assigned to plants Operational 7 to 21 days © J. Christopher Beck 2005 Types of Decisions Facility location, new products Production & transportation scheduling details 17

Planning vs. Scheduling Planning Horizon Multiple stages, medium term Scheduling One stage/facility, short term Information Aggregate Detailed Objective Time (e. g, . tardiness, makespan) Money © J. Christopher Beck 2005 18

Hierarchical Decomposition n n Planning solves higher level problems based on aggregate data The planning decisions are then used as constraints (e. g. , due dates) for the scheduling n n May be multiple independent scheduling problems Planning decouples scheduling problems! © J. Christopher Beck 2005 19