Abstract
An unreliable manufacturing system with random demand is examined. The demand rate may be sometimes smaller than the production rate or sometimes larger than the production rate. On the whole, the demand can be satisfied. Meanwhile, the system can produce several types of products. At any given time it can only produce one type of product. A setup (with setup time or cost or both) is required if production is to be switched from one type of product to another. Based on the idea of hierarchical control, a new two-level hierarchical production control and scheduling model is constructed to get the near-optimal production plan. The near-optimal production control and near-optimal inventory are determined at upper level no matter what the demand is and optimal production scheduling plan is determined at lower level. The iterative method is presented and numerical results are also given.
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