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© Prof. Dr.-Ing. habil. W. Dangelmaier, Heinz Nixdorf Institute, University of Paderborn TU Dresden, 15. + 16. May 1 Robust Production Planning: Business Case TRW Automotive - Optimization and Simulation in a Real-World Environment - TU Dresden 15. + 16. May, 2012 Robin Delius

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Page 1: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 1

Robust Production Planning:

Business Case TRW Automotive - Optimization and Simulation in a Real-World Environment -

TU Dresden

15. + 16. May, 2012

Robin Delius

Page 2: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 2

PART 1

0 Problem Description

1 Production Model

2 Results

PART 2

3 Uncertainties in Plan Execution

4 Combination of Optimization and Simulation

5 Conclusions

Robust Production Planning:

Business Case TRW Automotive

Page 3: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 3

Problem Description

Project is a cooperation between

Group of Business Computing esp. CIM

(Prof. Dr.-Ing. habil. Dangelmaier)

TRW Automotive GmbH, Gelsenkirchen

TRW Automotive GmbH in Gelsenkirchen is

manufacturing steering components

More than 700 employees

Sales: 294 Mio. €

Technological Portfolio (Steering):

Power Steering, EPHS-Systems, EPS-Systems

Tie Rods, Joints

Page 4: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 4

Problem Description

Identification of problem area:

Composition of planning models under consideration of operational decision variables and their

corresponding decision context

IT Liquidity Knowhow Employment

Staff Planning

Material Planning

Machine Planning

De

cis

ion

Le

lve

ls

Strategic Success Factors

Cost-minimal

delivery

reliability

Page 5: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 5

Problem Description

Models are a formal and mathematical description of the production and planning environment

Planning results are reusable within the following models

Production Capacities

Material

Capacities Staff Capacities

Production

Scheduling

Staff scheduling

Planning results for parameterization

Planning results for parameterization

M1

M2 M3 M4

M5

Operational

Planning

Page 6: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 6

Problem Description

Production plan execution is influenced by several uncertainties

Machine failures

Late/missing deliveries

Scrap parts

Current planning methods do not consider such influences sufficiently

Optimization methods usually examine the best case only and are unable to offer alternatives

when issues occur

Stochastic optimization methods typically become to complex to solve efficiently

Which leads to high solution times and are in practice often not applicable

We propose a combination of optimization and material flow simulation to overcome these

obstacles

Page 7: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 7

Production Model

Multi-stage production system of an automotive supplier as use case

Real world problem size

44 Products are manufactured on 21 machines.

External demands exist for 11 endproducts and are known for 56 periods beforehand

Page 8: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 8

Production Model

The production plan is created with a mathematical programming model

The model is based on the standardized Multi-Level Capacitated Lot-Sizing Problem (MLCLSP)

Big bucket model which determines the daily lot-sizes

Model consists of ~500k (mixed-integer) variables

Several extensions assure its real world applicability

Planning Horizon of 8 weeks on daily basis

Determination of production, setup and maintenance activities

Multiple products can be manufactured on one machine and the same product may be made

on several, parallel machines.

Inclusion of backlog amounts with corresponding penalty costs

Work shift amounts are dynamically determined

Higher costs for late-, night and weekend shifts are incorporated

Inclusion of Production KPIs

Reduction of Capital Commitment in stock and production

Page 9: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 9

Production Model

Restrictions within the model

𝐼𝑡−1,𝑝 + 𝑞𝑡−𝑛,𝑚,𝑝 − 𝑎𝑜,𝑝 ∗ 𝑞𝑡,𝑚,𝑜

ℙ𝑝

𝑜:𝑜≠𝑝

𝑀

𝑚

𝑀

𝑚

− 𝐼𝑡,𝑝 − 𝐵𝑡−1,𝑝 + 𝐵𝑡,𝑝 = 𝑑𝑡,𝑝 Inventory Equation

𝐼𝑡,𝑝 ≤ 𝑑𝑡′,𝑝𝑡+𝑟𝑡′=𝑡+1

𝑟∗ 𝑟𝑎𝑛𝑔𝑒𝑡,𝑝

𝑀𝐴𝑋

𝐼𝑡,𝑝 ≤ 𝑎𝑝,𝑜 ∗ 𝑞𝑡,𝑚,𝑜

ℙ𝑝𝑜:𝑜≠𝑝 𝑀

𝑚𝑡+𝑟𝑡′=𝑡+1

𝑟∗ 𝑟𝑎𝑛𝑔𝑒𝑡,𝑝

𝑀𝐴𝑋

Inventory Range (FG)

Inventory Range (WP)

𝐼𝑡,𝑝 ∗ 𝑠𝑒𝑙𝑙𝑖𝑛𝑔𝑃𝑟𝑖𝑐𝑒𝑝𝑝:𝑝∈𝐾

≤ 𝑐𝑎𝑝𝐶𝑜𝑚𝑚𝑖𝑡𝐾 Capital Commitment

𝑟 Range of preview within horizon

𝑟𝑎𝑛𝑔𝑒𝑡,𝑝𝑀𝐴𝑋

Acceptable inventory range for product p

in period t

𝑠𝑒𝑙𝑙𝑖𝑛𝑔𝑃𝑟𝑖𝑐𝑒𝑝 Price of product p

𝑐𝑎𝑝𝐶𝑜𝑚𝑚𝑖𝑡𝐾 Acceptable capital commitment

for key K

Inventory of product p in period t 𝐼𝑡,𝑝

𝑞𝑡,𝑚,𝑝 Production of product p in period t on

machine m

𝑎𝑜,𝑝 BOM: Number of pcs. Of product p, used

in product o

𝑑𝑡,𝑝 Demand for product p in period t

𝐵𝑡,𝑝 Backlog of product p in period t

Page 10: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 10

Production Model

Solving the model with Cplex® (IBM Ilog Solver) on a multi-CPU-Server (4x Intel XEON®, 24 Core)

is impossible without decomposition or partial reformulation

Due to its realworld application, simplification of model is not an option!

Methods for decomposition are:

Timewise decomposition (model splitting on time axis)

„Relax & Fix“-Approach

Cut-Formulation

Page 11: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 11

Production Model

Situation:

First Decomposition Timewise

Problem formulation with planning horizon of 8 weeks (56 Days)

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Splitting the planning horizon in „smaller chunks“ and generation smaller problem formulations

Subproblems are solved successively and combined afterwards, resulting in a feasible

solution for the overall problem formulation

Problem formulation with planning horizon of 8 weeks (56 Days)

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Subproblem 1 Subproblem 2 Subproblem 3 Subproblem 4 Subproblem 5 Subproblem 6 Subproblem 7 Subproblem 8

Week 1 Week 2 Week 3 Week 4 Week 5 Week 6 Week 7 Week 8

Successive Planning

Page 12: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 12

Production Model

Improving the planning relation between the subproblems …

… by overlapping planning of the subproblem

Subproblem 1 Subproblem 2 …

7 Tage

Subproblem 1 Subproblem 2 …

Overlapping SP 1

Overlapping SP 2

Subproblem 1 …

Gain of information can be used

for reformulation and

parameterization of the initial

subproblem

Page 13: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 13

Production Model

Relaxation of subproblems

Adding hard restrictions in each successive planning step and fixing already determined

variable values with upper/lower bounds

• Level 1: Delivery reliability at all costs

Minimizing backlog variables

• Level 2: Reduction of capital commitment

Minimizing inventory stocks

• Level 3: Improvement of capacity usage

Cost-optimal decision of capacities

Page 14: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 14

Integer solutions

Production Model

Closing gap between functional and formal solution quality

Without proof of optimality, existence of better solutions is possible

Adding „clique-cuts“ for solution confirmation

Dimension x

Dim

en

sio

n y

Real solution space

Binary variables form cliques with special properties:

Relaxation of model allows the following constellation:

Adding integer condition results in:

How to avoid this binary clique behaviour?

𝑏𝑖𝑛𝑛 + 𝑏𝑖𝑛𝑛+1 + 𝑏𝑖𝑛𝑛+2 + 𝑏𝑖𝑛𝑛+3 = 1

0,2 + 0,4 + 0,3 + 0,1 = 1

0 + 0 + 1 + 0 = 1

Page 15: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 15

Production Model

Coupling of binary variables

Results in a symmetric variables assignment for a,b,c,d

• 3,-3,-1,1

Determination of absolute values for variables a,b,c,d

Specific formulation neccessary, because determination of absolute value is described by

a non-linear function (solution by objective function)

Mathematical problem is more difficult to solve, since adding new variables and equations

increases the problem complexity

Initial solution is already available, so finding a solution is not neccessary! Confirmation of

solution quality is sufficient.

𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+1+𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+2+𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+3 + 𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛+2+𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛+3 + 𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛+3 = 𝑎

𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛+2+𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛+3+𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛 + 𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛+3+𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛 + 𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛 = 𝑏

𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛+3+𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛+𝑏𝑖𝑛𝑛+2 − 𝑏𝑖𝑛𝑛+1 + 𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛+𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛+1 + 𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+1 = 𝑐

𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛+𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛+1+𝑏𝑖𝑛𝑛+3 − 𝑏𝑖𝑛𝑛+2 + 𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+1+𝑏𝑖𝑛𝑛 − 𝑏𝑖𝑛𝑛+2 + 𝑏𝑖𝑛𝑛+1 − 𝑏𝑖𝑛𝑛+2 = 𝑑

𝑥 = 𝑥+ − 𝑥−

𝑥 = 𝑥+ + 𝑥−

𝑐 ∗ 𝑥+ + 𝑥−

𝑥𝑎+ + 𝑥𝑎

− + 𝑥𝑏+ + 𝑥𝑏

− + 𝑥𝑐+ + 𝑥𝑐

− + 𝑥𝑑+ + 𝑥𝑑

− = 8

Page 16: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

© P

rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

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niv

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ity o

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TU Dresden, 15. + 16. May 16

Production Model

Run GAP 1 2 3 4 5 6 7 8 9 10 Average Min Max Intervall Dekomp. Rel.+Fix. Cuts

Sce

nar

io

S1 (low) 112 107 119 123 103 119 121 110 112 127 115,3 103 127 24

0,88-0,99 0,72-0,78 0,09-0,15 S2 (medium) 175 163 161 165 183 191 180 177 190 189 177,4 161 191 30 S3 (high) 223 245 212 229 232 241 231 218 217 230 227,8 212 245 33

Finding Solution in Minutes Quality

Page 17: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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Results

Production

Capital Commitment

0

100

200

300

400

500

600

700

800

900

1000

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55

Pro

du

ctio

n C

apac

itie

s

Planning horizon

K9098_P63473

K9098_P12139

K9098_P73444

K9098_P19183

K9098_P99593

K9098_P69014

K9098_P42120

K9098_P62400

K9098_P52466

0

20000

40000

60000

80000

100000

120000

140000

160000

180000

200000

0

50

100

150

200

250

300

350

400

1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31 33 35 37 39 41 43 45 47 49 51 53 55

Cap

ital

in €

Inve

nto

ry

Planning horizon

LagerbestandP76313

zul. LagerreichweiteP76313

Kapitalbindungsgrenze

Page 18: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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TU Dresden, 15. + 16. May 18

And now…

Part 2

Page 19: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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TU Dresden, 15. + 16. May 19

Uncertainties in Production Plan Execution

The execution of a production plan rarely succeeds as planned before

Unforeseen events can influence the plan realization negatively

Results can be longer cycle times, machine blockage and scrap parts which are leading to

higher total production costs.

Replanning is inevitable to adapt to the new situation

To achieve a robust plan, which can handle unforeseen influences, two different planning targets

must be met:

Feasibility - the plan must be adhere to all given restriction and especially fulfill all demands

Result stability – the resulting plan‘s costs must not deviate far from the best case scenario in

any circumstances

A high feasibility robustness can lead to a lower result stability robustness.

Page 20: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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angelm

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ein

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Institu

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TU Dresden, 15. + 16. May 20

Combination of Optimization and Simulation

The execution of an production plan under stochastic influences can be simulated quickly.

Many replications allow a sufficient coverage of possible stochastic events

The simulation results can be aggregated to a new, more robust production plan

Single simulation runs can be used as pre-planned alternatives for edge cases

The simulation models must be generated correspondingly to the optimization model, containing

all constraints and objective measurements to achieve comparable results.

Our simulation is based on d³FACT, a high-performance, petri-net-based material flow simulation

framework by our workgroup, Business Computing, esp. CIM.

Page 21: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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angelm

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r, H

ein

z N

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Institu

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niv

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ity o

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orn

TU Dresden, 15. + 16. May 21

Combination of Optimization and Simulation

The initial production plan is created with IBM Ilog CPLEX 12.2 and loaded afterwards into the

simulation by converting the resulting solution file.

The material flow simulator performes several simulation iterations with a different random

number seed each, to generate diverse scenarios

During the simulation, the resulting plans are recorded and stored for postprocessing

Postprocessing allows for the simulation external manipulation of the underlying plan

Extension of planned capacities and shifts to provide sufficient buffer times

The evaluation calculates performance figures for the validity and result robustness upon the

plan’s performance in the different simulated scenarios.

CPLEX MST-File ConverterProduction

Pland³FACT

Production Plan including uncertainties

Evaluation

DB

Evaluated Production Plans

Postprocessing

Page 22: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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angelm

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ein

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Institu

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TU Dresden, 15. + 16. May 22

Combination of Optimization and Simulation

The simulation applies stochastic influences on the initial production plan.

Cycle, maintenance and setup times are randomly prolonged to imitate machine failures and

disturbances on the production process.

Due to the lack of accurate historical machine failure data, we took the failure rate and the

standard deviation by which the process times were prolonged as parameters for the

stochastical disturbance.

For our test cases we assumed:

The failure rate is 10% of total lots.

The planned process times are extended using a standard deviation of 15% and 30% of the

planned time.

Machines can react in two different ways when necessary materials are missing.

Naive machine control – waits until all parts for a lot are in place.

Rule-based machine control – skips the scheduled lot and produces the next, when all needed

materials are in place.

Page 23: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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Institu

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TU Dresden, 15. + 16. May 26

Conclusions

Increase of delivery reliability (+~2.5%) and planning efficiency (+~12.5%)

Simulations can be used to evaluate a production plan‘s robustness

Optimization results can easily be transferred into our simulation framework

Weak spots can be determined and fixed through automatic post processing and rule based

machine controls to decrease internal delays and increase the overall robustness

Performing a large number of simulations is substantially faster than running another instance of

the optimization problem

Page 24: Robust Production Planning: Business Case TRW Automotive · The execution of an production plan under stochastic influences can be simulated quickly. Many replications allow a sufficient

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rof.

Dr.

-Ing.

habil.

W. D

angelm

aie

r, H

ein

z N

ixdorf

Institu

te, U

niv

ers

ity o

f P

aderb

orn

TU Dresden, 15. + 16. May 27

Heinz Nixdorf Institute

University of Paderborn

Business Computing, esp. CIM

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