OPTIMIZATION REPORT ON

PRODUCTION PLANNING
PROBLEM

UNDER GUIDANCE OF
Dr. S.KAPURIA
BY
JAYKUMAR VISHWANATH TELI.
2011AMD3450

ANJAN KUMAR
2011AMD3406

INDIAN INSTITUTE OF TECHNOLOGY DELHI

DEPARTMENT OF APPLIED MECHANICS
 INDEX
SR. NO. CONTENTS PAGE NO

1 Mathematical optimization 3

2 Production planning 5

3 Problem 6

4 Design variables 7

5 Objective function & Constraints 8

6 Solution 9

7 MATLAB Programme 10

8 Summary 13

9 References 14

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1. Mathematical optimization
In mathematics, mechanical engineering, or management science, mathematical
optimization (alternatively, optimization or mathematical programming) refers to
the selection of a best element from some set of available alternatives.[1]

In the simplest case, an optimization problem consists of maximizing or minimizing a

real function by systematically choosing input values from within an allowed set and
computing the value of the function. The generalization of optimization theory and
techniques to other formulations comprises a large area of applied mathematics. More
generally, optimization includes finding "best available" values of some objective
function given a defined domain, including a variety of different types of objective
functions and different types of domains.

An optimization problem can be represented in the following way

Given: a function f : A R from some set A to the real numbers

Sought: an element x0 in A such that f(x0) f(x) for all x in A ("minimization")
or such that f(x0) f(x) for all x in A ("maximization").

Such a formulation is called an optimization problem or a mathematical

programming problem (a term not directly related to computer programming, but
still in use for example in linear programming - see History below). Many real-world
and theoretical problems may be modeled in this general framework. Problems
formulated using this technique in the fields of physics and computer vision may refer
to the technique as energy minimization, speaking of the value of the function f as
representing the energy of the system being modeled.

The function f is called, variously, an objective function, cost function

(minimization), utility function (maximization), or, in certain fields, energy
function, or energy functional. A feasible solution that minimizes (or maximizes, if
that is the goal) the objective function is called an optimal solution.

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By convention, the standard form of an optimization problem is stated in terms of
minimization. Generally, unless both the objective function and the feasible region are
convex in a minimization problem, there may be several local minima, where a local
minimum x* is defined as a point for which there exists some > 0 so that for all x
such that

the expression

holds; that is to say, on some region around x* all of the function values are greater
than or equal to the value at that point. Local maxima are defined similarly.

A large number of algorithms proposed for solving non-convex problems including

the majority of commercially available solvers are not capable of making a
distinction between local optimal solutions and rigorous optimal solutions, and will
treat the former as actual solutions to the original problem. The branch of applied
mathematics and numerical analysis that is concerned with the development of
deterministic algorithms that are capable of guaranteeing convergence in finite time to
the actual optimal solution of a non-convex problem is called global optimization.

Optimization problems are of two types

1. Single variable optimization:

This type of problem involves only single variable i.e. to be optimized,
These are little bit simple type of problems.
2. Multivariable optimization
These type of problems involves more than one variable.
These are complex problems & involve more mathematics.

Here we are considering production planning problem for optimization, details of

production planning we will see now.

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2. Production planning:
Manufacturing planning and control entails the acquisition and allocation
of limited Resources to production activities so as to satisfy customer demand over a
specified time Horizon. As such, planning and control problems are inherently
optimization problems,
Where the objective is to develop a plan that meets demand at minimum
cost or that fills The demand that maximizes profit. The underlying optimization
problem will vary due to differences in the manufacturing and market context. Typical
decisions include work force level, production lot sizes, assignment of overtime and
sequencing of production runs. Optimization models are widely applicable for
providing decision support in this context. In this article we focus on optimization
models for production planning for discrete-parts, batch manufacturing environments.
Production planning problems are generally linear programming models
Here we are considering production planning problem of air cooler manufacturer, who
wants to optimize his production schedule for minimizing production cost. Details of
problem are as follows.

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3. Problem:
A company manufacturing air coolers has at present orders for 6 months. The

company can schedule its production for next 6 months to meet orders on

Either regular or overtime basis. Following table indicates order size &

production cost for next six months.

Months 1 2 3 4 5 6

Orders 640 660 700 750 550 650

Regular 40 42 41 45 39 40
production
(cost/units)

Overtime 52 50 53 50 45 43
production
(cost/units)

With 100 air coolers in stock at present, the company wishes to have at least 150
coolers at end of 6 months. The regular & overtime production in each month should
not exceed 600&400 units resp.Inventory carrying cost For air cooler is 12Rs/unit per
month.

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4. Design variables:
Here in this problem there are three variables, they are as follows,

Number of coolers produced either by regular production method or by overtime

production method are main variables in this problem.

Also coolers i.e.to be carried into next month is also important variable, because it
will vary inventory carrying cost.

Therefore,

Xi= Represents number of units produced by using regular

Production process.

Yi= Represents number of units produced by using overtime process.

Zi=Number of units at the end of each month, i.e. to be carried into next month.

Where,

i=1-6 .

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5. Objective function:
Here main objective function is to minimize total production cost over six months. We
have to make schedule for next six months.

Objective function:

F=(40*X1+42*X2+41*X3+45*X4+39*X5+40*X6)

+(52*Y1+50*Y2+53*Y3+50*Y4+45*Y5+43*Y6)

+12*(Z1+Z2+Z3+Z4+Z5+Z6) .

6. Constraints:
Here constraints are mainly orders that are to be dispatched monthly

Also, 100 air coolers in stock at present.

The company wishes to have at least 150 Coolers at end of 6 months.

The regular & overtime production in each month should

not exceed 600&400 units respectively,

1st month: 100+X1+Y1-640=Z1

2nd month: Z1+X2+Y2-660=Z2
3rd month: Z2+X3+Y3-700=Z3
4th month:Z3+X4+Y4-750=Z4
5th month:Z4+X5+Y5-550=Z5
6th month:Z5+X6+Y6-650=Z6
Z6>=150
Xi <=600
Yi <=400

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7. Solution:
We will solve this linear optimization problem by MATLAB.
Programme for this problem is given at end of this report.
Optimized solution obtained from MATLAB is as follows,
The Regular Production in First Month = 447 pieces

The Regular Production in Second Month = 447 pieces

The Regular Production in Third Month = 447 pieces

The Regular Production in Fourth Month = 447 pieces

The Regular Production in Fifth Month = 447 pieces

The Regular Production in Sixth Month = 447 pieces

The Over-Time Production in First Month = 247 pieces

The Over-Time Production in Second Month= 247 pieces

The Over-Time Production in Third Month =247 pieces

The Over-Time Production in Fourth Month= 247 pieces

The Over-Time Production in Fifth Month =247 pieces

The Over-Time Production in Sixth Month =247 pieces

Inventory Carried for the Next Month=153 pieces

Inventory Carried for the Next Month=185 pieces

Inventory Carried for the Next Month=177 pieces

Inventory Carried for the Next Month=120 pieces

Inventory Carried for the Next Month=262 pieces

Inventory Carried for the Next Month=304 pieces

The Minimized Total Cost = Rs 1.967 * 10^5

So this is minimum cost required for obtaining required production.

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8. MATLAB Programme:
clear all
options = optimset ('LargeScale' , 'off' , 'GradObj' , 'off' ,...
'gradConstr' , 'off' , 'TolCon' , 1e-8, 'TolX' , 1e-8 );
lb=[1;1;1;1;1;1;1;1;1;1;1;1;1;1];
ub=[10000;10000;10000;10000;10000;10000;10000;10000;10000;10000;10000;10000;1000
0;10000;10000;10000;10000;10000;];
x0= [1; 1; 1; 1;1; 1; 1; 1;1; 1; 1; 1;1; 1; 1; 1;1;1];
[x,funval,exitflag,output]=...
fmincon('FUNCTION_1',x0,[],[],[],[],lb,ub,'CONSTRAINTS_1',options)

function [f] = FUNCTION_1(x)

x1=x(1);
x2=x(2);
x3=x(3);
x4=x(4);
x5=x(5);
x6=x(6);
x7=x(7);
x8=x(8);
x9=x(9);
x10=x(10);
x11=x(11);
x12=x(12);
x12=x(12);
x13=x(13);
x14=x(14);
x15=x(15);
x16=x(16);
x17=x(17);
x18=x(18);
f=(40*x1+42*x2+41*x3+45*x4+39*x5+40*x6)+(52*x7+50*x8+53*x9+50*x10+45*x11+43
*x12)+12*(x13+x14+x15+x16+x17+x18);

function[g,h]= CONSTRAINTS_1(x)
x1=x(1); x2=x(2);x3=x(3); x4=x(4);x5=x(5); x6=x(6);x7=x(7); x8=x(8);x9=x(9);
x10=x(10);x11=x(11); x12=x(12);x13=x(13); x14=x(14);x15=x(15); x16=x(16);x17=x(17);
x18=x(18);

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g(1)=600-x1;
g(2)=600-x2;
g(3)=600-x3;
g(4)=600-x4;
g(5)=600-x5;
g(6)=600-x6;
g(7)=400-x7;
g(8)=400-x8;
g(9)=400-x9;
g(10)=400-x10;
g(11)=400-x11;
g(12)=400-x12;
g(13)=x18-150;
h(1)=100+x1+x7-640-x13;
h(2)=x13+x2+x8-660-x14;
h(3)=x14+x3+x9-700-x15;
h(4)=x15+x4+x10-750-x16;
h(5)=x16+x5+x11-550-x17;
h(6)=x17+x6+x12-650-x18;

Maximum number of function evaluations exceeded;

increase OPTIONS.MaxFunEvals.

x=

447

447

447

447

447

447

247

247

247

247

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 247

247

152.3077

184.6154

176.9231

119.2308

261.5385

303.8462

funval =

1.9670e+005

exitflag =

output =

iterations: 55

funcCount: 1806

stepsize: -6.1035e-005

algorithm: 'medium-scale: SQP, Quasi-Newton, line-search'

firstorderopt: 52.9231

cgiterations: []

message: [1x79 char]

>>

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9. Summary:
From above optimized solution, we come to know that how production planning
problems can be optimized.

If we know the orders for fixed number of months & also cost required for carrying
out production operation then we can minimize cost of production for this stipulated
period.

We can use this technique in various fields such as logistic department, In diet
industry, Service industry, Military operations etc.

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10. References:

1. Manufacturing Planning and Control

Stephen C. Graves
Massachusetts Institute of Technology

2. Production Planning and Control

http://www.taylorandfrancisgroup.com/

3. For MATLAB Programme

http://www.mathworks.com

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