2. Production Planning and Scheduling: Interaction and Coordination

In many organizations, production planning is part of a hierarchical planning, capacity/resource allocation, scheduling and control framework. The production plan considers resource capacities, time periods, supply and demand over a reasonably long planning horizon at a high level. Its decision then forms the input to the more detailed, shorter-term functions such as scheduling and control at the lower level, which usually have more accurate estimates of supply, demand, and capacity levels. Hence, interaction between production planning and production scheduling/control is inevitable, not only because the scheduling/control decisions are constrained by the planning decisions, but also because disruptions occurring in the execution/control stage (usually after schedule generation) may affect the optimality and/or feasibility of both the plan and the schedule. If the overall performance of the production system is to be improved, disruptions must be managed effectively, with careful consideration of both planning and scheduling decisions. This chapter focuses on the interaction between production planning and scheduling, emphasizing the coordination of decisions, with special emphasis on making robust decisions at both levels in the face of unexpected disruptions. We provide examples and realistic scenarios from semiconductor manufacturing.