A combined model predictive control and time series forecasting framework for production-inventory systems

Abstract

Model Predictive Control (MPC) has been previously applied to supply chain problems with promising results; however most systems that have been proposed so far possess no information on future demand. The incorporation of a forecasting methodology in an MPC framework can promote the efficiency of control actions by providing insight in the future. In this paper this possibility is explored, by proposing a complete management framework for production-inventory systems that is based on MPC and on a neural network time series forecasting model. The proposed framework is tested on industrial data in order to assess the efficiency of the method and the impact of forecast accuracy on the overall control performance. To this end, the proposed method is compared with several alternative forecasting approaches that are implemented on the same industrial dataset. The results show that the proposed scheme can improve significantly the performance of the production-inventory system, due to the fact that more accurate predictions are provided to the formulation of the MPC optimization problem that is solved in real time.