Supply Chain Optimization: Centralized vs Decentralized Planning and Scheduling

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In supply chain management manufacturing flow lines consist of two or more work areas, arranged in series and/or in parallel, with intermediate storage areas. The first work area processes raw items and the last work area produces end items or products, which are stored in a storage area in anticipation of future demand. Firstly managers should analyze and organize the long term production optimizing the production planning of the supply chain. Secondly, they have to optimize the short term production analyzing and organizing the production scheduling of the supply chain and finally taking under consideration the stochasticity of the real world, managers have to analyze and organize the performance of the supply chain adopting the best control policy. In supply chain management production planning is the process of determining a tentative plan for how much production will occur in the next several time periods, during an interval of time called the planning horizon. Production planning also determines expected inventory levels, as well as the workforce and other resources necessary to implement the production plans. Production planning is done using an aggregate view of the production facility, the demand for products and even of time (ex. using monthly time periods). Production planning is commonly defined as the cross-functional process of devising an aggregate production plan for groups of products over a month or quarter, based on management targets for production, sales and inventory levels. This plan should meet operating requirements for fulfilling basic business profitability and market goals and provide the overall desired framework in developing the master production schedule and in evaluating capacity and resource requirements. In supply chain management production scheduling defines which products should be produced and which products should be consumed in each time instant over a given small time horizon; hence, it defines which run-mode to use and when to perform changeovers in order to meet the market needs and satisfy the demand. Large-scale scheduling problems arise frequently in supply chain management where the main objective is to assign sequence of tasks to processing units within certain time frame such that demand of each product is satisfied before its due date. For supply chain systems the aim of control is to optimize some performance measure, which typically comprises revenue from sales less the costs of inventory and those