A HIERARCHICAL PRODUCTION PLANNING FRAMEWORK FOR THE TEXTILE

INDUSTRY WITH MAKE TO ORDER AND MAKE TO STOCK CONSIDERATIONS

W. Kotayet 1, A.B. Eltawil 2, M.N. Fors 3
1
Graduate student, Alexandria University, Egypt, email: walaakotayet@gmail.com
2
Associate Professor, Industrial Engineering and Systems Management, School of Innovative
Design Engineering, Egypt-Japan University of Science and Technology (E-JUST), P.O. Box 179,
21934 New Borg el Arab, Egypt, email: eltawil@ejust.edu.eg
3
Professor of Industrial Engineering, Production Engineering Department, Alexandria University,
email: fors@dataxprs.com.eg

Abstract: The aim of this paper is to introduce a proposed framework for Hierarchical Production
Planning (HPP) in the textile industry. A three level HPP is adopted; at the first level, the
decoupling point concept is used to split the full production line into smaller production stages,
followed by solving the problem of where to hold stock to provide a high level of service. Using
Theory of Constraints (TOC), the bottleneck stage has been identified in the textile production
cycle. In the second level of the HPP, the decision of determining which products to manufacture
to-order and which products to manufacture to-stock in the bottleneck stage is done using a cluster
analysis approach and demand variability analysis, in the form of Relative Demand Volatility
(RDV). At the third level, the required demand and the available capacity at the bottleneck stage
are balanced and the decision of allocating the production orders to the planning periods is made.
Keywords: Textile industry, hierarchical production planning, customer order decoupling point,
theory of constraints, relative demand volatility, master production schedule
Introduction
According to the United Nations conference on trade and development [1], during the last two
decades textiles and clothing were the second most dynamic products in world trade. The sector is
important for developing countries, which supply about 50 % of the world market for textiles and
over 60 % of the world market for clothing. On the other hand, diversification into export categories
with greater value added than traditional agricultural exports remains a major objective for many
low-income developing countries.
A textile production unit is characterized by a multi-stage process with multiple production units per
stage (i.e., parallel machines). Textile manufacturing systems involves more than one stage with
each stage yielding a product that is either pulled as finished product or further reprocessed in the
next stage. A different production planning method may be used for each production stage are
required [2].
Fibers are the raw materials for all fabrics. Some fibers are natural that come from plants, animals,
and minerals. Other fibers are synthetic that are made from petrochemicals. From the natural
fibers in Egypt, cotton is the largest crop produced and processed in the textile industry.
Litrature Review
Bowers and Jarvis [3] proposed a hierarchical production planning and scheduling model
encompassing an apparel production planning system. Adamopoulos et al. [4] presented a
decision support system dealing with the production planning and scheduling in the textile industry.
Ford and Rager [5] described an expert system developed to support a decision scenario in the
textile industry. Karacapilidis and Pappis [2] presented an interactive model based system for the
management of production in textile production systems. Shiroma and Niemeyer [6] presented the
details of the implementation of an evolutionary algorithm that made use of domain-dependent
information to generate production schedules for a manufacturer of women's clothing. Tucci and
Rinaldi [7] presentd the experience of applying the tabu search metaheuristic to production
scheduling in weaving. De Toni and Meneghetti [8] improved production planning process in a
time-based logic for a network of firms in the textile-apparel industry. Wu and Chang [9] described
the method and procedure for optimizing a textile dyeing manufacturing. Ferraris and Morini [10]
built a simulation of production scheduling at spinning stage. Laoboonlur [11] solved the dyeing
and finishing scheduling problem by using the Virtual Factory plus family scheduling. Mohafiqul et
al. [12] dealt with a decision making of apparel export-oriented firm regarding their capacity
utilization during production. Vassileva [13] described an application of a software system at the
spinning department in a textile enterprise.
Most research in the area of production planning in textile industry concentrate on studying the
operational level and the sequencing of the jobs. The tactical level planning seldom has been
tackled as input for the studied operational level. Moreover, hybrid make-to-order and make-to-
stock policy did not take enough attention in production management literature on textile industry,
although it is an important issue in production planning and in product-mix decisions as it will be
further illustrated in this work.
The textile industry is well known for unique characteristics when compared to industries in either
process or discrete manufacturing [2]. Both discrete and continuous operations are present in
textile industry. Spinning, weaving and dyeing stage in textile are continuous operations, but, the
entire system includes both continuous operation and discontinuous operations [14]. The mixed
character of a textile production system, which lies between job-shop and flow-shop, makes
production management quite complex. Hierarchical production planning approach is best suited
for such industry. The essential idea of having such hierarchical approach is the partition of a large
problem into smaller, more manageable sub-problems.
This paper presents a HPP framework that assists the decision maker in handling the complexity
of the planning process in textile industry. Using the proposed framework, the potential stocking
points can be located and the bottleneck stage is to be identified. Production and inventory policies
will be assigned for the bottleneck stage. Finally, the bottleneck stage will be optimized to achieve
a proper inventory and production decisions.
The Proposed Framework
In order to reduce the complexity of the production planning process in textile industry, a three
levels Hierarchical Production Planning (HPP) approach is proposed, as shown in figure 1. At the
first level of the HPP, the decoupling point concept is used to split the full production line into
smaller production stages, then, the problem of where to hold stock is solved to provide a high
service level. Moreover, the Customer Order Decoupling Point (CODP) concept suggests a
qualitative way to answer the MTO/MTS question. Using the Theory of Constraints (TOC), the
bottleneck stage is identified.
At the second level of the HPP, the decision of determining which products to manufacture to-
order, and which products to manufacture to-stock in the bottleneck stage is done using a cluster
analysis approach and demand variability analysis, in the form of Relative Demand Volatility
(RDV). Using cluster analysis, the products can be categorized into four clusters:
 high volume, low variability;
 high volume, high variability;
 low volume, low variability ; and
 low volume, high variability.
Accordingly, the products can be classified into two groups: high priority products, which have
large orders, and low priority products, which have small orders. These two groups will be handled
separately in terms of responsiveness. This categorization will help to exploit the bottleneck in a
better way.
Due to the large product mix in textile industry, determining which product to make-to-order versus
make-to-stock is an important issue in the production planning and in the product-mix decision.
The objective of the product-mix decision in the overall production plan is to find the product mix
and the production program that minimizes the cost subject to constraints imposed by resource
limitations, market demand, and sales forecast (the costs are production cost, inventory holding
cost, and penalty of unsatisfied demand). Such decision implies utilizing limited resources to
maximize the net value of the output from the production facilities.
At the third level of the HPP, the required
demand and the available capacity are Strategic planning
balanced and the decisions of allocating the
production orders to the planning periods are
Splitting the full
made as follows: Process and production line,
Product and
stock Identifying Customer

Level One
 The first cluster is to develop a Master characteristics Order Decoupling
market
characteristics
Points, and taking
Production Schedule (MPS) model that MTO vs. MTS decision
can be implemented in the bottleneck among stages

stage.
Identify the bottleneck at the textile
 The products for the second cluster will production line using TOC

follow make-to-order policy, however,

Tactical Level
sufficient safety stock should be held to
meet the customer service objective. Classifying the products into
clusters using cluster

Level Two
 Since clusters three and four have low analysis technique at the
bottleneck stage
volume demand, they are more likely to
be fulfilled within the delivery due data. The
Take MTO vs. MTS decision at the
The
variability Volume
Consequently, it is reasonable to produce of the
bottleneck stage for each cluster
of the
them to-order. Moreover, the fabrics for demand demand

these two clusters are classified as low

priority fabrics, so backorders may be
Level Three
The required demand and the available capacity are
allowed. balanced and decisions are made, concerning the
allocation of production orders to planning periods, for
Rough-cut capacity planning is done for all the clusters using MPS and Rough-cut capacity planning

the products at all clusters; this rough-

capacity evaluation is combined with the MPS
Operational planning
model.
Figure 1. The proposed hierarchical production
Applying the HPP Framework in cotton planning framework
Based Textile Industry
Level One: Potential Stocking Points and the Bottleneck Identification
(1) The application of CODP
Theoretically, seven potential decoupling points exist at the production process: the stock of raw
materials, the stock of yarns, the stock of warped yarns, the stock of starched warp, the storage of
weaved fabric, the storage of the dyed and finished cloth, and the storage of the sewed end
product, as shown in Figure 2.

Fiber
Warp Starch Weaving Dying/ Sewing
making &
spinning making Finishing
Raw FG
Material Inventory Inventory Inventory Inventory Inventory Inventory
Inventory (2) (3) (4) (5) (6) (7)
(1)

Figure 2 . Potential decoupling points within the stages of cotton based textile industry

(2) Identifying the bottleneck stage using TOC

(a) Identifying the primary constraint: The weaving process is a bottleneck in the entire production
cycle of cotton based textile plants. It is characterized by high setup time, high production time,
high product mix, and limited capacity. This is not the case when applying TOC on other types of
textile industries such as synthetic or silk based ones.
(b) Exploiting the constraints: (i) In order to increase the throughput given the existing capacity
limitations, the products that have the least inventory and operation costs and sell more, are given
high priority in production scheduling. (ii) These products are candidates to have inventory stocked
to produce them (raw material or processed product), in order to improve their associated service
level.
(c) Subordinating everything else to the decisions made in the previous step: Exploiting the
constraint does not ensure that the materials needed by the constraint stage will always be
available on time. This is often because these materials are waiting in queue at a non-constraint
stage that is running a job while the constraint stage does not need it yet. Inventory should be
used carefully so that the bottleneck stage is never starved for materials, the flow of products
should equal the market demands.
(d) Elevating the constraint: By eliminating all idle times, improving maintenance and coordinating
maintenance plans and reducing setup times, the constrain stage capacity can be increased.

Level two: taking MTO vs. MTS decisions at the bottleneck stage
Using the Theory of Constraints (TOC), it is found that the weaving stage is a bottleneck in the
cotton based textile production cycle. Therefore, in the second level, the decision of determining
which products to manufacture to-order and which products to manufacture to-stock in the
weaving stage is done using a cluster analysis approach and the demand variability analysis in the
form of “Relative Demand Volatility” (RDV).
(1) MTO and MTS decisions at weaving stage
A demand variability analysis, in the form of “Relative Demand Volatility” (RDV), as suggested in
Olhager [15] and Van Donk et al [16], could be followed. In this approach, RDV and average
demand volume are used to categorize products into MTO and MTS. The RDV is defined as the
coefficient of variation, i.e. the ratio between standard deviation of demand and the average
demand.

RDV =
 i
, where  i = Standard deviation for the demand of product i
( Av.Demand ) i
Clustering is the partitioning of a data set into subsets (clusters), so that the data in each subset
share some common trait. The computational task of classifying the data set into k clusters is often
referred to as K-clustering. The K-means algorithm assigns each point to the cluster whose center
is nearest. Using the Cluster Analysis, the products would be categorized into four clusters: (1)
High volume, low variability, (2) High volume, high variability, (3) Low volume, low variability and
(4) Low volume, high variability, this categorization depends on the average monthly demand and
the coefficient of variation. Figure 3 illustrates an example of the products’ classification clusters
for a typical case.
(2) Exploitation of the bottleneck stage
In order to achieve better exploitation to the bottleneck stage, a solution is proposed for finding
suitable production policy for each cluster.
(a) Classification of the products: The fabrics are classified into two groups: high priority fabrics,
which have large orders volume, and low priority fabrics, which have small orders volume. The due
date of high priority fabrics should be treated more strictly than the one of low priority fabrics.
Moreover, the high priority products customers should be provided with a high degree of
responsiveness.
(b) Fabrics with high volume and low variability: In order to facilitate fast response to the high
priority fabrics customers, the high volume items with low variability will be made-to-stock.
(c) Fabrics with high volume and high variability: If the RDV value is high, it is not reasonable to
use an MTS policy, since this would lead to excessive inventories. Therefore, the products for this
cluster will follow make-to-order policy. However, sufficient safety stock will be held to meet the
customer service objective. Safety stock (SS) is held as a hedge against uncertainty. This stock
will be used only in the case in which the delivery lead time happened to be less than the
production lead time.
(d) Fabrics with low volume and high / low variability: These two clusters have low volume
demand. Therefore, they are more likely to be fulfilled within the due date. Consequently, it is
reasonable to produce them to-order. Moreover, the fabrics of these two clusters are classified as
low priority fabrics so backorder maybe allowed.
In the next level, a master production schedule model is developed to be implemented in the
weaving stage.

Figure 3 . An example for the resulting products' classification clusters

Level three: balancing the demand and the available capacity
At the third level of the HPP, the required demand and the available capacity are balanced and the
decisions of allocating the production orders to the planning periods are made.
(1) The proposed Master Production Schedule
The Master Production Schedule (MPS) is a delivery plan for the manufacturing organization. It
includes exact amounts and delivery timing for each end product. It is derived from demand
estimates, but it is not necessary equal to them. When developing the MPS, a major
manufacturing constraint is the production capacity. Therefore, to check feasibility of the MPS, an
initial capacity evaluation is made using “Rough-Cut Capacity Planning” (RCCP).
(a) The MPS problem definition
The weaving production system under study is a flexible flow shop made up of identical parallel
machines of known capacity. A number of products are to be produced for customers, having
known deterministic demand in each period.
The required output is (1) For cluster one products, determining how much to produce from each
product at each period. (2) For cluster two products, a rough-cut capacity evaluation for the current
period, taking into account the availability of safety stock. (3) For cluster three and four products,
rough-cut capacity evaluation at the current period is to be done. This should be determined with
the objective of minimizing the overall costs including the costs of inventory, production and the
penalty of unsatisfied demand. Also, the capacity evaluation should consider the limited capacity
assigned for each cluster, and the available raw materials (yarn).
The proposed master production schedule is updated via the use of a three months rolling horizon
schedule. For the products of cluster one, the production of the current period is used to fulfill the
forecasted demand of the next period, in other words, the demand is produced for one period
ahead.

(b) The MPS model assumptions and constraints

Model Assumptions
Set-up costs are significant at the lowest operational level when the individual products are
sequenced. At the monthly level, however, production costs dominate change-over costs. Hence,
set-up costs are not included in the analysis.
For cluster one: Actual demand for items is assumed to be known for each period of the planning
horizon. Backorders are not allowed and holding inventory is allowed
For cluster two: The demand is derived from the confirmed orders and backorders are not allowed.
For clusters three and four: The demand is derived from the confirmed orders and backorders
maybe allowed.
Decision variables:
Xit = Number of units produced of item i at period t (meter)
Vit = Number of units at end inventory of product i at period t (meter)
Jit = Number unsatisfied production units of item i at period t (meter)
Parameters:
Dit = demand of product i at period t (meter).
Ctu = capacity, meters/period t, available for products of cluster u (meter).
Si = the value of beginning inventory (meter).
Yktu= total number of units available of yarn of type k at period t for cluster u (meter).
Fki= number of units required from yarn type k to produce one unit of product i (meter).
Li = unsatisfied production penalty / unit of item i (L.E.)
Hi = inventory holding cost /unit of item i/ period (L.E.).
Pi = production cost /unit of item i (L.E.)
PL = production lead time (day)
DL= delivery lead time (day)
At cluster two, the stock will be used only in the case in which the delivery lead time happened to
be less than production lead time.
S if DL  PL
Vi 0   i
 0 otherwise
The objective function
The objective is to minimize the total costs, for the first cluster, along the planning horizon
(typically three months). For the second, third and fourth clusters the minimization is done for the
first/current period. These costs include the total inventory holding cost (which is calculated based
on the remaining stock from the previous period) “time bucket two weeks”, total unsatisfied
production penalty (which is a combination of the cost per unit short of an item i and cost
associated with the importance of the fabric), and the total production cost.
t i
Min  J it Li  Vit H i  X it Pi (1)
1 1
Subject to:
i. Balance constraints:
 For clusters one, the end inventory for item i at end of period t equals the sum of end
inventory of period t-1, in addition to the quantity produced of item i at period t, and the
quantity of unsatisfied production units of item i at period t, minus the demand of i at t.
 For cluster two, the end inventory for item i at the end of the current period (t=1) equals the
sum of end inventory of the last period (t=0), in addition to the quantity produced of item i at
the current period t, and the quantity of unsatisfied production units of item i at the current
period, minus the demand of the current period.
 For clusters three and four, the sum of the quantity produced of item i during the current
period t and the quantity of unsatisfied production units of item i during the current period t
equals to the demand of i at time period t.
Vi (t 1)  X it  Jit  Dit  Vit t, i t  1,2,...,T i  u  1 (2)

Vi 0  X it  J it  Dit  Vit i t  1, i  u  2 (3)

X it  J it  Dit i t  1 i  u  3, 4 (4)

ii. Inventory constraints:

The initial quantities of the inventory on hand from each product i at the end of the first period
equal value Si.
Vi 0  S i i i  u  1, 2 (5)

iii. Capacity constraints:

They ensure that the total production quantity in units from all individual products per cluster
cannot exceed the capacity allocated for that cluster.
i

X it  Ctu t i  u  1 (6)
1

X it  Ctu t  1 i  u  2,3, 4 (7)

1

iv. Raw material constraints:

They ensure that the total yarn of type k that is consumed at period t cannot exceed the total
available amount of yarn type k at period t.
i

F ik X it  Yktu t , i, k t  1,2,...T , i  u  1 (8)

1

F ik X it  Yktu t , i, k t  1, i  u  2,3, 4 (9)

1

v. Non negativity constraint:

J it , X it ,Vit  0 t , i (10)

(c) Model testing and verification

To verify the MPS model, some scenarios were solved using hypothetical data. These scenarios
were prepared so that the output can be expected before solving the model, in order to prove that
the model yields right results. The model was implemented and solved using LINGO® optimization
package. LINGO uses exact algorithms to solve linear programming models.
Conclusions
In this paper, we employed hybrid approach make-to-order and make-to-stock at a hierarchical
production planning framework. This framework tries to fill the gap in the research of studying the
tactical level at textile industry.
When applying the framework in one of the leading companies in the area of textile industry, the
model takes into account the effect of products segregation to MTO and MTS products. Moreover,
it gives different priorities that depend on the amount of demand the product occupy, compared
with the total demand. The proposed model's results were superior compared to the company's
performance in terms of cost, inventory and unsatisfied demand reduction.
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