A hierarchical approach to production planning for complex manufacturi
ng systems is presented. A single facility comprising a number of work
-centers that produce multiple part types is considered. The planning
horizon includes a sequence of time periods, and the demand for all pa
rt types is assumed known. The production planning problem consists of
minimizing the holding costs for all part types, as well as the work-
in-process and the backlogging costs for the end items. We present a t
wo-level hierarchy that is based on aggregating parts to part families
, work-centers to manufacturing cells and time periods to aggregate ti
me periods. The solution at the aggregate level is imposed as a constr
aint to the detailed level problems which are formulated for each manu
facturing cell separately. This architecture uses a rolling horizon st
rategy to perform the production management function. We have employed
perturbation analysis techniques to adjust certain parameters of the
optimization problems at the detailed level to reach a near-optimal de
tailed production plan. Numerical results for several realistic exampl
e problems are presented and the solutions obtained from the hierarchi
cal and monolithic approaches are compared. The results indicate that
the hierarchical approach offers major advantages in computational eff
iciency, while the loss of optimality is acceptable. Copyright (C) 199
6 Elsevier Science Limited