Using profit maximizing scheduling models to structure operational trade-offs and manufacturing strategy issues

Manufacturing plays an increasingly important role in determining the competitiveness of the firm. However, corporate strategy is often formulated with little regard for how these decisions affect operations within the manufacturing system. Detailed models provide a necessary link between manufacturing performance and the functional policies followed by the firm, so that the strengths of the manufacturing system can be consistently reflected in strategic decisions. This paper presents a scheduling model that relates the strategic decisions that determine the type of work that must ultimately be processed by the manufacturing system with the detailed decisions that determine how this work should be scheduled. The model accounts for varying processing time, delay penalty, and revenue characteristics among the jobs available for processing by a single facility, with jobs partitioned in multiple classes such that a setup is incurred each time two jobs of different classes are processed in succession. Given limited processing capacity, the objective is to simultaneously determine the subset of jobs to accept for processing and the associated order in which accepted jobs should be sequenced to maximize the total profit realized by the facility. Problem formulations and dynamic programming algorithms are presented for both the special case in which all available work is from a single job class, and the more general case involving multiple job classes. The insight derived from these models concerning the operational implications of strategic decisions is illustrated through a series of example problems, first focusing on the coordination of marketing and manufacturing policy, and finally by considering important issues related to manufacturing focus.