AHP and Multi-Objective Optimization Approach to Product Categorization and Production Planning for a Lubricant Manufacturing Company

Huang Rong

Abstract

There are many problems with the balance and flexibility of the existing order production scheduling method of S company. In view of the complex production characteristics of products such as multiple varieties and small batches, the company continue to face many challenges. One of the main challengers in the delivery, S company must reasonably allocate the available limited resources to arrange the production of the products required by each customer, while optimizing the flow of goods, increasing the inventory turnover rate, shortening the delivery time, increasing customer satisfaction and minimizing costs. In order to meet the instability of market demand and dynamic requirements of customers. Therefore, it is necessary to explore and investigate the possibilities of routing solutions so that the company can remain competitive and cost-effective in the market.

The goal of this project is to study and develop optimization model and categorization of the product to improve current production planning based on both static and dynamic customer demands. The optimization model and categorization of the product developed will be applied to current order from customer recently to demonstrate its effectiveness in addressing resource allocation issues. For the product categorization we use AHP based multiple-criteria (sales volume, order frequency, profit, lead time and reputation) consensus framework utilizing the technique for order preference for ABC analysis to replace the current ABC classification that only considers two factors of sales volume and order frequency. For optimization model, after optimizing the ABC grouping of products, the production mode is determined in advance for different categories of products, which has ensured to shorten the supply cycle, improve market competitiveness, and control costs.

Developed optimization measures for the order scheduling problem of S company: First, optimized the selection of order production methods from the perspective of improving customer satisfaction, and proposed the selection method of order optimal production methods; That is, according to the sales history of the past six months, use AHP software to analyze and formulate the ABCD category of the product to improve the accuracy of category setting. Then, according to the production time, shipping time, storage cost and other information of the different categories of ABCD in the past six months, an MIP model in LING is used to determine the optimal combination and matching mode.