While optimization typically has been reserved for bigger companies, with dedicated staff to create and run models using sophisticated software, there are some interesting alternatives to consider for most manufacturing companies. The most famous of optimization problems is the Traveling Salesman Problem (TSP): Given a list of cities and the distances between each pair of cities, what is the shortest possible route that visits each city exactly once and returns to the origin city? Now, if you consider production scheduling optimization you might automatically recognize applying a TSP optimization to Job Shops where you might have a number of different orders, each requiring a different routing. And each routing might have variations as well, can run this product through a multi purpose CNC machine, or run it through individual machines? And, what kinds of people are available to run such equipment? The bottom line is, how should I run the shop to maximize my profits, or minimize my costs, subject to a variety of constraints -customers order due at definite times, workcenters have finite capacity, reduce overtime, per hour costs for various workcenters and labor, etc.?
For process operations, such as blending, the optimization result can minimize cost of components while meeting blending guidelines. Anyway you look at it, optimization up front before releasing a production plan, will result in the most efficient and profitable solution. What’s imperative is, once said optimal plan has been released, how to translate that to a detailed execution plan that will be responsive to day to day changes, and how to react, re-balance, re-optimize said plan while working it.
Now, given the amazing potential ROI for considering this step (optimization), and considering the tools are available in every copy of Excel (Solver), why aren’t more manufacturing concerns leveraging optimization? Well, the truth is, there is a lot of fancy, high level mathematics behind the process, and most folks in that domain space prefer to keep the techniques a bit of a black box. However, it might serve manufacturers well to investigate using Solver (and other open source solvers for Excel) in combination with a good production scheduling solution to achieve the highest level of profitability and efficiency possible.