Integrating release and dispatch policies in production models

Aggregate production planning for highly re-entrant production processes is typically generated by finding optimal release rates based on clearing function models. For production processes with very long cycle times, like in semiconductor production, dispatch policies are used to cover short term fluctuations. We extend the concept of a clearing function to allow control over both, the release rates and priority allocations in re-entrant production. This approach is used to improve the production planning problem using combined release and the allocation dispatch policy. The control parameter for priority allocation, called the push-pull point (PPP), separates the beginning of the factory which employs a push policy from the end of the factory, which uses a pull policy. The extended clearing function model describes the output of the factory as a function of the work in progress (wip) and the position of the PPP. The model's qualitative behavior is analyzed. Numerical optimization results are compared to production planning based only on releases. It is found that controlling the PPP significantly reduces the average wip in the system and hence leads to much shorter cycle times.