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19 International Conference on Production Research

THE PROPOSAL OF PRODUCTION PLANNING AND CONTROL SYSTEM APPLICABLE

BY SUPPLY CHAIN INTEGRATION THROUGH AGENT-BASED SOLUTIONS

P. Golinska1, N.Brehm 2, M. Fertsch1, J. Marx Gómez2, J. Oleskow 1, P. Pawlewski1

1
Faculty of Computing and Management, Poznan University of Technology, Poznan, Poland
2
Department of Business Informatics, Oldenburg University, Oldenburg, Germany

Abstract
The changing business environment in which manufacturers are acting creates the need for more effective
production processes planning and control methods that are able to deal with uncertainties inherent in
internal processes and external deliveries. The aim of the paper is to introduce the method for production
planning and control applicable in conditions of supply chain (SC) able to overcome the limitation of
standard MRP/ERP systems in changing environment. Conceptual framework for the method involves the
hybrid solutions combining the advantages of MRP simple logic and theory of constrains (TOC) ability to
synchronize all production and material flow in supply chain. Authors discuss how application of TOC
buffers monitoring procedures can help to improve the control of synchronized production and material
flow in supply chain. Finally paper presents application of elaborated method for creation of an agent-
based system that integrate the parties involved in supply chain.

Keywords:
production planning and control, theory of constrains, agent-based systems, supply chain

1 INTRODUCTION of mentioned above systems in SC application area can

Supply chain is a flexible and cooperative business
network of suppliers, manufacturer and distributors
through which raw material are acquired, transformed
within value adding (VA) processes and delivered as final
goods to customers. In many modern supply chains the
power has been shifted from manufacturer to consumer,
so the ability to fulfill customer orders at required time
horizon and cost effective determines the supply chain
overall performance. The supply chain performance is
defined in following paper as ability to fulfill clients orders
on-time, so the perspective of product delivery process
(PDP) is taken in consideration by all assumptions. The
SC performance will be measured as a ratio regarding
customers orders delivered due-to-date to overall
customers orders being executed in supply chain in
defined period, so SC performance equals to 1 means
that all products delivery processes very executed in
accordance with clients requirements. In order to optimize
the performance, supply chain functions especially
production planning must operate in an integrated
manner.
In number of industries where high value products (like
automobiles, high-tech equipment) are made on basis of
make-to-order strategy the manufacturer has sufficient
power over the suppliers and others parties involved in
supply chain (SC) and is able to act as a leader. In
following paper we refer by all assumptions to such a
situation.
In order increase the SC performance the production
processes planning and control methods have to be able
to deal with uncertainties inherent in internal processes
and external deliveries. Uncertainty can be defined as the
conditions within supply chain when probability of
particular events/disturbances appearance cannot be
counted.
There is already a variety of information systems to
facilitate the flow of materials, information and funds from
MRP (Materials Requirements Planning) and ERP
(Enterprise resource planning), to newly developed SCM
systems. The comprahensive research regarding potentail
be found in [1]. The production planning and control
based mainly on MRP/ERP allows integrating functional
areas within enterprise at the operational level, however
main limitations of such systems is intra-enterprise focus,
simultaneously most of existing Supply Chain
Management (SCM) systems provided analytical tools for
advanced planning but lack the integration with MRP/ERP
system.
There is a need to introduce the method for production
planning and control supported by IT solution applicable
in conditions of SCM able to overcome the limitation of
standard MRP/ERP systems in changing environment.
In following paper in Section 2 authors will discussed
main problems that appear by integration of supply chain
in PDP planning and control processes. Section 3
enhances the issues related to distributed planning
process, where authors proposed algorithm for
hierarchical production planning by multi-agent system.
Authors also present how application of TOC buffers
monitoring procedures can help to improve the control of
synchronized production and material flow in supply
chain. The elaborated by authors concept of an agent-
based system for integration of production planning in
supply chain is presented in Section 4. Final conclusions
and further research steps are stated in Section 5.
2 PRODUCTION PLANNING AND CONTROL (PPC) IN
SUPPLY CHAIN
2.1 Integration of material flow in Supply Chain-main
problems
The benchmark for integration of material flow in supply
chain is the concept of seamless supply chain. The
seamless supply chain [2] is a state of total integration in
which players think and act as one.
Due to the uncertainty inherent in supply chain the
seamless supply chain is nowadays mainly a theoretical
concept however, a number of companies take a
challenge to reach this goal in the nearest future. To
approach the seamless supply chain the following
sources of uncertainty must be reduced [3]: process
uncertainty, supply uncertainty, demand uncertainty,
distribution uncertainty, control uncertainty.
The Figure 1 presents the diagram of uncertainty problem
referring four main area of uncertainty: demand side,
supply side, process side and control side. It shows the
simplified Product Delivery Process (PDP) where
manufacturer response to customers demands by
replenishing the inventories of raw materials and sub-
elements from suppliers. Referring to propose by Masson-
Jones and Towill [4] generic approach to uncertainty
problem in PDP we apply the following framework to
reduce uncertainty in supply chain Fig. 1. The reduction of
uncertainty is achieved by understanding and tackling the
roots of uncertainty in any of mentioned area and
especially by analyses of flows at any of pointed
interferences.
Control system
Suppliers Manufacturer Distributors
(supply side) (VA-processes) (demand side)
Area to be
Material flow monitored/improved
Information flow Interfaces to be
monitored/reengineered
Figure 1: Diagram of the uncertainty problem and
potential for its reduction (modified from 3)
Production in defined supply chain is executed on make-
to-order strategy and due the technology requirements
orders are placed in advance by defined time window (for
example at least 4 weeks in advance) effect of demand
uncertainty in production planning horizon can be ignored.
Regarding supply side uncertainty, VA processes
uncertainty and control uncertainty SC performance can
be improved by lead-times reduction regarding both
deliveries lead times and technological processes leads
times.
In order to achieve this goal better platform for
information exchange is required in order to identify
potential problems in material flow regarding supplies
availability and material quality in area of making
production plans and in area of control when disturbances
appear which requires preplanning of initial production
plans and schedules.
2.2 Role of Master Production Schedule in PPC
Planning is the process of selecting and sequencing
activities such that they achieve one or more goals and
satisfy a set of domain constraints [5]. Scheduling can be
defined as a process of selecting among alternative plans
and assigning resources and times to the set of activities
in the plan. Schedules should reflect the temporal
relationships between activities and the capacity
limitations of a set of shared resources. In following
research authors refers to production planning strategy
based on the Planed Order Release schedule and MRP
concept where Master Production Schedule is the main
planning and control schedule. It states what kind of end
products should be produced and it helps preliminary
verify whether customers’ orders can be fulfilled due-to-
date. MPS is main driver and information source for
further material requirements planning and
accompanying calls or supplies and allows making
details production schedules for production system
resources in planning horizon [6].
Due uncertainty inherent in SC in manufacturing systems
things rarely go as expected. Researches examined a
variety of buffering or dampening techniques to minimize
the effect of uncertainty in manufacturing systems based
on MRP logic. Comprehensive literature review can be
found in Guide and Shiverasta [7]. In situation when the
dampening or buffering techniques are not efficient the
modification of Master Production Schedule is needed.
The high replanning frequency in order to overcome the
uncertainty induces the system nervousness.
The system nervousness can be defined as state of a
system when a minor change in MPS creates significant
changes in material requirements planning (MRP) [8]. The
syndrome of system nervousness can be described as
following:
1. Frequent changes in Master Production Schedule
(MPS) result in due-date changes in open orders,
quantity and timing for planned order of end
products,
2. Mentioned changes are translated into gross
Clients requirements changes for components and
(demand side)
timing of their delivery,
3. Unexpected changes in MPS effect that materials
needed for a particular order may not be
available
The availability of materials is often limited due the fact
that suppliers have similar bottlenecks and schedules
variations transmitted from sub-tier suppliers.
In supply chain where manufacturer acts as a leader the
manufacturing system nervousness has negative impact
on overall SC performance, so it can be assumed that
changes in MPS in ERP system should be reduced.
2.3 Problem formulation
The research problems can be formulated as following :
• How to make initial MPS that is as feasible as
possible and that optimized the SC performance
• How to limit the number of replanning activities
• How to be reactive to disturbances in materials
flow
• How to provide planners with accurate
information about material resources available
which often lead to bloated inventory and
inaccurately promised delivery dates to
customers
In manufacturing environment the initial MPS has to be
changed often due the fact that it is not feasible. The
manufacturer can fulfill customer orders on time only
when by elaboration of MPS he negotiates with other
supply chain participants the due-dates for raw materials
and components deliveries and distribution of finals
goods. It can be assumed that the reduction of
manufacturer’s ERP system nervousness can be achieved
by increasing the cooperation and information exchange
between supply chain participants at moment of initial
MPS preparation and further by MPS execution.
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19 International Conference on Production Research

3 METHOD FOR PRODUCTION PLANNING AND Authors decided to refer to TOC control mechanism
CONTROL APPLICABLE IN CONDITIONS OF Drum-Buffer-Rope (DBR) [11]. This concept can be
SUPPLY CHAIN (SC) applied by elaboration distributed planning algorithm due
the fact that DBR allows to synchronize the use of
3.1 Synchronization approach resources without having to actively control each
The synchronized production planning and control resource. The purpose of drum is to exploit the constraint
requires the constant flows of information, materials, and of the closed loop supply chain. Buffers are time windows
funds across multiple functional areas both within and protecting the Supply Chain global constrain and
between chain members. bounded to it the critical path of PDP.
Due the fact that MPS is the main driver and information 3.2 Algorithm for distributed production planning
source for further material requirements planning and
details production schedules for production system The planning process can be presented as following
resources it can be assumed that in supply chain where algorithm:
exist a single manufacturer and a single 1-tier 1. Definition of chain goal and set of performance
supplier/limited number of 1-tier suppliers and the indicators
manufacturer has sufficient power over the others parties 2. Generate a initial MPS for manufacturer taking in
involved in supply chain a global MPS can be elaborated. consideration customer orders assign to planning
Taking in consideration following the distributed planning horizon plan and capacities constrains
can be described as a situation where in centralized 3. Negotiate the initial plan with supply and
process of preparing plans the distributed sub plans for distribution side and find a plan with lower
each supply chain’s participant are elaborated [9]. The number of constrains among them ( so called
sub-plans for supplier side and distribution side are feasible MPS for supply chain)
dependent on manufacturer capacities, so it can be 4. Decompose the feasible MPS for subplans for
treated as main constrain in planning process. supply, manufacturer and distribution side)
Authors decided to refer to Theory of Constrains [10] by 5. Insert synchronization among subplans based on
elaboration distributed planning algorithm due the fact TOC concept for time buffers and Drum-Buffer-
that entities in supply chain are bounded in long term Line concept where manufacturer sub-MPS is
cooperation and manufacturing side can be perceived as giving pace for supplies and distribution planning
a global (in given planning horizon) constrain. In TOC all activities
processes are set to the process of most constrained 6. Allocate subplans to agents using task-passing
conditions namely bottleneck. TOC is used as a mechanism, if failure come back to previous step
management technique for identification and exploitation or generate new global MPS (step 2)
of constrained condition that infected the goal 7. Initiate plan execution and monitoring when
achievement of the system. In MRP/ERP systems all plans are executed in TOC green buffer no
processes match to the speed of the production of final additional replanning needed when plans are
goods. In TOC all processes are set to the process of executed in yellow TOC buffer the replanning at
most constrained conditions namely bottleneck. So it can local level, if plans are executed in TOC red
be assumed that the improvement of productivity of all buffer go to step 2.
processes at the same speed pace as the improvement of The DBR buffers refers to time needed for deliveries of
constrained conditions can be expanded to the entire materials and component. The size of buffer in stable
supply chain. manufacturing system is as three times the average lead
time to the constraint form the raw material release point
The TOC is applied for: [11]. In SC where uncertainty in process and deliveries
– Definition of chain goal lead-times appears the buffer can be counted as defined
– Definition of goals measures as the multiplied minimum cumulative processing time for
– Identification of global constraints the individual part [12]
– Definition for rules for coordination between
global and local constraints management BSi=MULTI·∑j=1PTij
– Definition of rules for management of material Where BSi is the size of buffer for part i=(1,2,3,..,n), PTij
flow through the constrained conditions is the minimum processing time for operation j on part i.
MULTI is a constant multiplier. The mentioned above
Synchronization approach buffer is divided in three area: green (no action needed),
yellow( prepare for actions) and red (react). The size of
each part of buffer can be equal, but it is recommended to
Synchronized manufacturing (SM) Seamless supply chain (SSC)
revise the performance of buffer’s green, yellow and read
zone on regular basis in order to tune their size to
Drum-Buffer-Rope (DBR) The SSC is defined by zero
(Shragenheim and Ronan defects in material flow statistical fluctuations appearing in material flows in
1990) (Towill 1997) there is: particular manufacturing environment.
‰drum
constraint
exploits the ‰no raw material stock, Authors propose application of the elaborated method for
while raw materials arrive at
‰buffers are intended as the last moment
creation of the proposal of an agent-based system that
protection from ‰no WIP due extreme integrate the parties involved in supply chain.
disturbances flexibility and speed
‰no finish goods because
‰rope is a mechanism products are in exact order
design to force all the sequence and of good 4 CONCEPT OF AGENT-BASED SYSTEM
parts of the system to quality.
work at pace set by drum Recently there is a number of researches regarding the
application of an agent-based systems for production
purpose [13, 14, 9]. Most of them are dedicated for
Figure 2: Synchronization approach project-oriented unit production. In following paper
authors refers to high stabilized production systems where
on assembly lines customized similar products (for
example cars) are manufactured. Agent-based system is
defined in following paper as a multi-agent system that’s
acts as a support tool to bigger Information System and
utilized the databases of main system (ERP system).
Multi-agent system is a collection of heterogeneous,
encapsulated applications (agents) that participate in the
decision making process [15] gents communicate,
collaborate and negotiate in order to meet their own
design objective but also a goal that is shared within the
community. In following paper authors apply Jennings
and Wooldridge’s definition: "an agent is a computer
system situated in some environment, and that is capable
of autonomous action in this environment in order to meet
its design objectives. Agents have the following
characteristic [15]: reactive, pro-activeness, social ability.
4.1 System model
The following assumptions have been made:
• Between time of MPS preparation and MPS
execution within production system the
disturbances will occur
• The exchange of information allows to
improve both activities planning and re-
planning
• While optimizing the performance function
all have access to the same information (no
information asymmetry)
• The manufacturer has sufficient channel
power over the suppliers and others parties
involved in supply chain.
The planning problem will be described at three layers
reflecting to:
1. supply chain perspective so called global
planning;
2. the entity level where global plan is divided
to sub-plans which are executed by each
company and being transform for individual
production schedule at company level and
local re-planning activities takes place (the
entities represent supply side, manufacturer
side and distribution side of supply chain)
3. intra-company sub-layer where production
control activities are executed and
information about disturbances are gathered
and passed to upper levels.
Figure 3: AIPLUSC model
The proposed model is based of assumption that agent-
based system will act as “glue” integration existing
information systems within each company at global
supply chain level.
At particular company level system will monitor MPS
execution by existing productions management systems
and will be responsible for replanning if needed, in order
to meet global supply chain goal, namely on time delivery
of ordered by customer’s products with required quality
and price. The architecture of proposed tool (AIPPLUSC)
is based on the assumption that system will support the
MPS creation in ERP system and will be plug in to ERP
system database by for example java connector. Figure 1
illustrates structure and the amount of agents which can
be found in each layer. The graphical user interface agent
creates a graphical user interface (GUI) for the interaction
of the MAS to production manager (direct users). The
GUI-Agent is able to initialize and sent behaviour
parameters and messages to the Master Planning Agent
(MP-Agent). The MP-Agent will be exactly one time in the
system because the data from all the managing agents
(M-Agent) is fused at this agent to generate re-planning
schedules for the production, distributors or supplier. The
MP-Agent is responsible for control of the logic of all
agents and creates the plans for the M-Agent following the
algorithm presented in previous section. M-Agents are
initialized by the MP-Agent they are responsible for
translation of the global plan into detail schedules. The
agent is allowed to prepare the number of
alternative(contingency) local plans as long as there are
not conflicting with global MPS. The local replanning
activities are allowed as long as their don’t influence the
global MPS. When replanning activities affects the global
MPS (red buffer) it has to be passed to MP-Agent. The CI-
Agent is responsible for control of plans execution within
one company based on given performance indicators. It
reports to M-Agent in upper layer whether production
plans are executed according to given MPS or not and
asses how big is the delay, if any (green, yellow or red
buffer flag). The number of Ci-Agent in the AIPPLUSC can
vary and this fact is shown by the “*”.Improvement of
cooperation and information exchange for MPS creation
will achieved by cooperation of following agents, which
reflects to entities involved in supply chain:
− MP-Agent (master planning)- is responsible for
creation of global supply chain’s Master
Production Schedules on basis of negotiations
with logistic agent, production agent and
distribution agent, if crisis appears on basis of
information received from production agent it
changes MPS and inform logistic agent about it;
− M-Agent Logistic - responsible for coordinating
plans and suppliers, to achieve the best possible
results in terms of the goals of the supply chain,
including on-time delivery, it combines functions
of inventory management and purchasing;

(everything ok), yellow (there is a risk of delay) or red
(alarm).
The buffer control logic is following :
Figure 4: System architecture
− M-Agent Production - is responsible for
scheduling and rescheduling activities in the
manufacturer factory, exploring hypothetical
“what-if” scenarios for potential orders, and
generating schedules that are sent to ERP
system for execution. It dynamically manages
the availability of resources
so that the schedule can be executed .
− M-Agent Distribution- responsible for the
assignment and scheduling of transportation
resources to satisfy on-time fulfillment of
customers orders. It communicates with
production agent in order to update it schedules.
4.2 System logic-buffer control mechanism
The buffer can be described as time window in PDP .
Main responsible for monitoring of system buffer are Ci-
agents, that check every defined period of time the size of
time buffer on bases of data for PPC system for example
ERP. According to achieved results it reports to upper
level (appropriate M-Agent) the following status: green
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19 International Conference on Production Research
1. when green- it sends a message to layer 2 (M-
agent) and don’t do anything until next check
period;
2. when it is yellow Ci-agent reports to its own M-
Agent due is not allow to contact M-agent at
other company. The M-agent begins the reactive
replanning procedure according to schema
presented in Figure 5. The schema can be
simplified as:
• When there is the contingency plans
plan allowing the local replanning
without changes of due-dates to other
sub-plans in production of planning
process it make the replanning. (i.e. M-
agent Logistic has a problem with it
plans but for example by working in
Saturday it can be achieved to provide
materials for next week on time for
manufacturer)
• When there is contingency plan but
there is a risk of delay it negotiate with
next M-agent
• When it is no contingency plan it
informs MP-Agent, who makes
replanning (according to algorithm
described in Section 3.2)
3. when red- it sends a message to alarm the M-
agent. M-agent send back message to
recalculate the buffer. When the answer from Ci-
agent is confirming (again red) then M-Agent
reports it to MP-agent, who sends the message
to M-agent how big is the delay (time is main
characteristics in this approach due performance
is measure by ability to deliver product to
customer on-time). On bases of the answer start
replanning procedure (algorithm)
 Figure 5: Buffer control mechanism- yellow instance
5 CONCLUSIONS
In following paper authors present the concept of an agent
based system for integrated production planning in supply
chain AIPPLUSC, the multi-agents distributed system that
reflects the needs for distributed decision making in multi-
entities environment. The system design requirements
refer to increase of integration of information and material
flow between entities that are involved in network. The
issues related to distributed planning process were
discussed and a new algorithm for hierarchical production
planning by multi-agent system based on concept of
centralized planning for distributed plans was proposed.
Perspectives for further research should reflect to
elaboration of communication algorithm among agent and
structure of standardized input and output data structure
for all companies involved in supply chain. The issue
related to increasing trust and safety for information
exchange between entities involved in supply chain should
be examined.
6 ACKNOWLEDGMENTS
The following paper is reporting the work-in-progress
status of research project financially supported by DAAD
in framework of the 5 months research grant for Paulina
Golinska at Department of Business Informatics at Carl
von Ossietzky University of Oldenburg.
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