A chance constraint based multi-item production planning model using simulation optimization

Abstract

We consider a single stage multi-item production-inventory system under stochastic demand. We had previously proposed a production planning model integrating ideas from forecast evolution and inventory theory to plan work releases into a production facility in the face of stochastic demand. However, this model is tractable only if the capacity allocations are exogenous. This paper determines the capacity allocated to each product in each period using a genetic algorithm. Computational experiments reveal that the proposed algorithm outperforms the previous approach in both total cost and service level.