American Journal of Operations Research, 2017, 7, 174-186

http://www.scirp.org/journal/ajor
ISSN Online: 2160-8849
ISSN Print: 2160-8830

Multi-Objective Production Planning Using

Lexicographic Procedure

Mohamad Sayed Al-Ashhab1,2*, Taiser Attia1, Shadi Mohammad Munshi2

Design & Production Engineering Department, Faculty of Engineering, Ain-Shams University, Cairo, Egypt
1

Department of Mechanical Engineering, College of Engineering and Islamic architecture, Umm Al-Qura University, Makkah,
2

KSA

How to cite this paper: Al-Ashhab, M.S., Abstract

Attia, T. and Munshi, S.M. (2017) Mul-
ti-Objective Production Planning Using This paper presents a multi-objective production planning model for a factory
Lexicographic Procedure. American Jour- operating under a multi-product, and multi-period environment using the
nal of Operations Research, 7, 174-186. lexicographic (pre-emptive) procedure. The model objectives are to maximize
https://doi.org/10.4236/ajor.2017.73012
the profit, minimize the total cost, and maximize the Overall Service Level
Received: February 28, 2017 (OSL) of the customers. The system consists of three potential suppliers that
Accepted: May 6, 2017 serve the factory to serve three customers/distributors. The performance of
Published: May 9, 2017 the developed model is illustrated using a verification example. Discussion of
the results proved the efficacy of the model. Also, the effect of the deviation
Copyright © 2017 by authors and
Scientific Research Publishing Inc.
percentages on the different objectives is discussed.
This work is licensed under the Creative
Commons Attribution International Keywords
License (CC BY 4.0).
Multi-Objective, Production Planning, Goal Programming, Multi-Products,
http://creativecommons.org/licenses/by/4.0/
Open Access
and Multi-Periods

1. Introduction
Goal programming is an extension of linear programming in which targets are
specified for a set of constraints. In the pre-emptive model, goals are ordered ac-
cording to priorities. The goals at a certain priority level are considered to be infi-
nitely more important than the goals at the next level. In pre-emptive Goal Pro-
gramming using objective functions, there is a set of objective functions and
knowing which are the most important. Initially, the optimal value of the first
goal is found. Once it has been found this objective function is turned into a con-
straint such that its value does not differ from its optimal value by more than a
certain amount. This can be a fixed amount (or absolute deviation) or a percen-
tage of the optimal value found before. Now the next goal (the second most im-
portant objective function) is optimized and so on [1].

DOI: 10.4236/ajor.2017.73012 May 9, 2017

 M. S. Al-Ashhab et al.

For solving the multi-objective optimization problems, some researchers used

the e-constraint method which consists of transforming the multi-objective
problem into a single objective one where all other objectives are handled as con-
straints. Guillén et al. (2005) [2] presented a multi-objective MILP model for the
design problem of a supply chain taking into account the net present value, the
demand satisfaction, and the financial risk as key goals. Altiparmak, Gen, Lin,
and Paksoy (2006) [3] formulated a mixed integer nonlinear model for a mul-
ti-objective supply chain network designed for a single product of a plastic com-
pany. Liu and Papageorgiou (2013) [4] studied the production, distribution, and
capacity planning of SCs using a multi-objective MILP formulation. For solving
the problem, they first used the e-constraint method with the total cost as the
preferred objective, maintaining the total flow time and the customer service level
as model constraints.
Some researchers used lexicographic technique like Sawik (2007) [5] who ap-
plied the lexicographic approach for solving the multi-period production sche-
duling problem. The proposed model maximizes the customer service and mini-
mizes production fluctuations for reducing the unit production costs. Also Ma-
vrotas, 2009 [6], Pishvaee et al., (2012) [7] have used the lexicographic technique
as a complement of the e-constraint method for finding the extreme points of the
Pareto frontier, while non-extreme points are calculated by changing the values of
parameter e.
Other researcher used other method; Guilhereme E Vieira and F. Favaretto
(2006) [8] proposed a practical heuristic for the MPS creation which strongly
impacts final product costs, a decisive measure for being competitive. C. C. Chern,
J. S. Hsieh (2007) [9] proposed multi-objective master planning algorithm, for a
supply chain network with multiple finished products. Wu, Z. et al. (2012) [10]
proposed an ant colony algorithm that assured high efficient production, but only
two objectives have been considered. Genetic Algorithms also have been used
where Soares M. M. et al. (2009) [11] developed and proposed GA structure for
MPS and a software based on C++ programming language and objective oriented
modeling is also tested. And Zapfel et al. (2010) [12] used a genetic algorithm to
generate the final integrated production-distribution plan.
M. S. Al-Ashhab (2016) [13] presented an MILP optimization model to solve
the partner selection, and production planning problem. But, the author used
constraint programming and he did not take the beginning and ending inventory
into consideration.
In this study, a multi-objective production planning model is developed for a
factory operating under a multi-product, and multi-period environment consi-
dering the beginning and ending inventories using the pre-emptive procedure.
The model objectives are to maximize the profit, minimize the total cost, and
maximize the overall service rate of the customers. The model is solved using
Xpress-MP 7.9 software on an Intel® Core™ i3-2310M CPU @2.10 GHz (3 GB of
RAM).
The developed model tackles many problems at the same time; the model

175
M. S. Al-Ashhab et al.

solves the problems of location and allocation of the suppliers and customer; the
model solves the production planning optimizing multi conflicting objectives
considering all echelons’ capacities and beginning and ending inventories.
The system consists of three approved suppliers that serve the factory to serve
three customers/distributors as shown in Figure 1.

2. Model Assumptions and Limitations

The following assumptions are considered:
• The model has multi-objectives.
• Overall Service Level (OSL) is assumed as the ratio of the total weights deli-
vered to the total weights required for all customers in all periods.
• Initial and ending inventory are assumed for all products.
• Costs parameters (fixed costs, material costs, manufacturing costs, non-utilized
capacity costs, shortage costs, transportation costs, and inventory holding
costs) are known for each location, each product at each period.
• All facilities have limited capacity for each period.

3. Model Formulation
The model involves the following sets, parameters and variables:
Sets:
N: number of goals.
S: potential number of suppliers, indexed by s.
C: potential number of customers, indexed by c.
T: number of periods, indexed by t.
P: number of products, indexed by p.
Parameters:
Ff: fixed cost of the factory,

Figure 1. Factory, suppliers, and customers coordination network.

176
 M. S. Al-Ashhab et al.

DEMANDcpt: demand of customer c from product p in period t,

IIfp: Initial inventory of product p in the factory store,
FIfp: Final inventory of product p in the factory store,
Ppct: unit price of product p at customer c in period t,
Wp: product weight,
MHp: manufacturing hours for product p,
Dsf: distance between supplier s and the factory,
Dfc: distance between the factory and customer c,
CAPst: capacity of supplier s in period t (kg),
CAPMft: capacity of the factory raw material store in period t,
CAPHft: capacity in manufacturing hours of the factory in period t,
CAPFSft: storing capacity of the factory in period t,
MatCost: material cost per unit supplied by supplier s in period t,
MCft: manufacturing cost per hour for factory in period t,
MHp: Manufacturing hours for product p,
NUCCf: non-utilized manufacturing capacity cost per hour of the factory,
SCPUp: shortage cost per unit per period,
HC: holding cost per unit weight per period at the factory store,
Bs: batch size from supplier s,
Bfp: batch size from the factory for product p,
TC: transportation cost per unit per kilometer,
Type: Type of goal objectives; percent or absolute,
Sense: Sense of goal objectives; max or min.
Decision Variables:
Ls: binary variable equal to 1 if a supplier s is contracted and equal to 0 other-
wise,
Lis: binary variable equal to 1 if a transportation link is activated between
supplier s and the factory,
Lic: binary variable equal to 1 if a transportation link is activated between the
factory and customer c,
Qsft: number of batches transported from supplier s to the factory in period t,
Qfccpt: number of batches transported from the factory to customer c for
product p in period t,
Iffpt: number of batches transported from the factory to its store for product p
in period t,
Ifccpt: number of batches transported from store of the factory to customer c
for product p in period t,
Rfpt: residual inventory of the period t at the store of the factory for product
p,
CSLc: Customer Service Level of customer c.

3.1. Objective Functions

The model considers three objectives; the first objective is to maximize the profit
(Total Revenue-Total Cost), the second objective is to minimize the total cost,

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M. S. Al-Ashhab et al.

while the third one is to maximize the Overall Service Levels of all customers.
1) Profit Objective
The Profit is calculated by subtracting the total cost from total revenue given in
Equation (1).
=
Total Revenue ∑ ∑ ∑ ( Qfccpt + Ifccpt ) Bf p Ppct (1)
c∈C p∈P t∈T

2) Total Cost Objective

The total cost is the summation of fixed, material, manufacturing, non-utilized
capacity, shortage, transportation, and inventory holding costs calculated as
shown in Equations (3) to (9).
3) Overall Service Level Objective
The Overall Service Level is the summation of the Customer Service Levels of
all customers that calculated by Equation (2).
=CSLc ∑ ∑ ( Qfccpt + Ifccpt ) * Bf p * Wp ∑ ∑ DEMANDcpt * Wp (2)
p∈P t∈T p∈P t∈T

3.2. Total Cost Elements

Total cost = fixed cost + material costs + manufacturing costs + non-utilized ca-
pacity costs + shortage costs + transportation costs + inventory holding costs.
The cost elements of the total cost are calculated using Equations (3) to (9).
1) Fixed Cost
Fixed costs = Ff (3)

2) Material cost
=
Material cost ∑∑ Qsft Bs MatCostst + ∑ IIf pWp MatCosts1
s∈S t∈T p∈P
(4)
− ∑ FIf pW p MatCostsT
p∈P

3) Manufacturing cost
=
Manufacturing cost ∑ ∑ ∑ Q fcpt Bf p MH p Mct + ∑ ∑ Iff pt Bf p MH p Mct
c∈C p∈P t∈T p∈P t∈T
(5)
+ ∑ IIf p MH p Mc1 − ∑ FIf p MH p McT
p∈P p∈P

4) Non-Utilized capacity cost (for the factory)

Non-Utilized capacity cost
  (6)
∑  ( CAPH ft ) L f − ∑ ∑ ( Q fcpt Bf p MH p ) − ∑ ( Iff pt Bf p MH p )  NUCCf
=
t∈T  p∈P c ∈ C p∈P 
5) Shortage cost (for customers)
  
∑ ∑  ∑  ∑ DEMANDcpt − ∑ ( Q fcpt + Ifccpt ) Bf p   SCPU p
t t
=
Shortage cost (7)
p∈P c∈C  t∈T  1 1 
6) Transportation costs
Transportation cost= ∑ ∑ Qsft BsTcDsf + ∑ ∑ ∑ ( Q fcpt + Ifccpt ) Bf pWpTcD fc (8)
t∈T p∈P p∈P t∈T c∈C

7) Inventory holding costs

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 M. S. Al-Ashhab et al.

T −1
=
Inventory holding costs ∑ IIf pt Bf pWp HC + ∑ ∑ Rf pt Bf pWp HC (9)
p∈P p∈P t =
1

3.3. Constraints
3.3.1. Balance Constraints
∑ Qsft Bs
= ∑ ∑ ∑ Qfccpt Bf pWp + Iff pt Bf pWp , ∀t ∈ T (10)
s∈S s∈S c∈C p∈P

IIf p Rf p1 B fp + ∑ Ifccp1 Bf p , ∀p ∈ P
Iff p1 Bf p += (11)
c∈C

Iff pt Bf p + Rf p( t −=
1)
Bf p Rf pt Bf p + ∑ Ifccpt Bf p , ∀t ∈ 2 → T , ∀p ∈ P (12)
c∈C

( Qfc cpt + Ifccpt ) Bf p ≤ DEMANDcpt + ∑ DEMANDcp( t −1)

1→t
(13)
( )
− ∑ Qfccp( t −1) + Ifccp( t −1) Bf p , ∀t ∈ T , ∀c ∈ C , ∀p ∈ P
d∈D

Rf pT Bf=
p FIf p , ∀p ∈ P (14)

Constraint (10) ensures that the quantity of material entering to the factory
from all suppliers equals the sum of the output to its store and customers.
Constraints (11)-(13) ensure that the sum of the flow entering to factory store
and the residual inventory from the previous period is equal to the sum of the
output to each customer and the residual inventory of the existing period for each
product.
Constraint (14) ensures that the sum of the flow entering to each customer
does not exceed the sum of the existing period demand and the previously accu-
mulated shortages for each product.

3.3.2. Capacity Constraints

Qsft Bs ≤ CAPst Ls , ∀t ∈ T , ∀s ∈ S (15)

∑ Qsft Bs ≤ CAPMft L f , ∀t ∈ T (16)

s∈S

 
 ∑ ∑ Qfccpt Bf p + ∑ Iff pt Bf p  MH p ≤ CAPHft L f , ∀t ∈ T (17)
 c∈C p∈P p∈P 

∑ Rf pt Bf pWp ≤ CAPFSt L f , ∀t ∈ T (18)

p∈P

Constraint (15) ensures that the flow exiting from each supplier to the factory
does not exceed the supplier capacity at each period.
Constraint (16) ensures that the sum of the material flow entering to the facto-
ry from all suppliers does not exceed the factory capacity of material at each pe-
riod.
Constraint (17) ensures that the sum of manufacturing hours for all products
manufactured in the factory to be delivered to its store and all customers does not
exceed the manufacturing capacity hours of it at each period.
Constraint (18) ensures that the residual inventory at the factory store does not
exceed its storing capacity at each period.

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M. S. Al-Ashhab et al.

4. Model Verification
4.1. Model Inputs
An example is assumed to verify the efficacy and efficiency of the model. The
demands of all customers for all products in six periods are 550, 850, 450, 750,
350 and 850 units respectively. The beginning inventories of the three products
are 50, 100, and 150 units with a total weight of 700 Kg (50 × 1 + 100 × 2 + 150 ×
3) and the required ending inventories are 100, 150, and 200 respectively with a
total weight of 1000 Kg (100 × 1 + 150 × 2 + 200 × 3). Other parameters are con-
sidered as showing in Table 1.
The first objective is to maximize the profit; the second objective is to minimize
the total cost, while the third objective is to maximize the OSL without any al-
lowable deviation for the objectives to simplify the model verification process.

4.2. Model Outputs and Discussion

The optimal factory network is shown in Figure 2. The factory shall take its ma-
terial only from the second supplier to reduce the transportation cost where it is
the nearest one. The quantities of products delivered to each customer in all of
the six periods are shown in Table 2.
The factory shall serve the three customers but with different service levels
which are shown in Figure 3. It can be noticed that the CSL of the second cus-
tomer is the highest one because of its closeness to the factory that maximizes
the profit (first objective).
The optimal values of the three objectives; Profit, total cost, and Overall Ser-
vice Level are $3,053,853.8, $1,496,146.2, and 87.28%.
The model results of flow are verified through this example as shown in Fig-
ure 4 and Figure 5. Figure 4 represents the flow balancing of weights during the
first three periods since it is noticed that, during the first period the factory re-
ceived 10 tons of material and supply 9700 kg directly to the customer to satisfy
some of their demand and store 300 in its store which had an initial inventory of

Table 1. Verification model parameters.

Parameter Value Parameter Value

Transportation cost per

3 0.001
kilometer per Kg ($)

Number of products 3 Holding cost per period ($/kg) 3

Fixed costs ($) 50,000 Capacity of each supplier (Kg) 12,000

Factory capacity in hours (hrs) 12,000 Supplier batch size 10

Weight of products 1, 2, 3 (Kg) 1, 2, 3 Factory Batch size 1

Machining time of
Price of Products 1, 2, 3 100, 150, 200 1, 2, 3
products 1, 2, 3 (hrs)

Material Cost ($/kg) 10 Capacity of Raw Material Store (Kg) 10,000

Manufacturing Cost ($/hr) 10 Capacity of Factory Store (Kg) 2000

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 M. S. Al-Ashhab et al.

Table 2. Quantities of products delivered to each customer in all of the six periods.

Customer #1 Customer #2 Customer #3

Period
P1 P2 P3 P1 P2 P3 P1 P2 P3

1 550 550 550 550 550 550 550 550 550

2 850 850 0 600 0 850 850 850 850

3 449 450 1300 0 1300 450 0 0 267

4 751 750 750 0 0 550 0 1200 483

5 350 350 350 1800 1100 550 1550 350 0

6 850 850 0 850 850 450 850 850 0

Figure 2. The optimal factory network.

700 kg to send 200 kg from its initial inventory (FIFO) to the customers to satis-
fy the remaining demand without shortage. A shortage of 4500 kg can be noticed
in the second where the demand of the second period requires 15,300 kg of raw
material which exceeds the factory capacity of the material of 10,000 kg and
stored quantity of 800 kg. This shortage increases the net accumulated demand
of the third period to 12,600 which lead to reduce the accumulated shortage to
2600 kg.
Figure 5 shows that during the remaining periods, the raw material required
to satisfy customer demand exceeds the factory raw material capacity so the fac-
tory will not store any inventory during the fourth and fifth periods, but is

181
M. S. Al-Ashhab et al.

CSL

88.82% 94.74%
78.29%

C1 C2 C3

Figure 3. The resulted CSL of the customers.

Period # 1 Period # 2 Period # 3

Supplier Supplier Supplier

10000 10000 10000 10000 10000 10000

Factory Factory Factory

10000 300 9700 10000 0 10000 10000 0 10000

1000 Start 700 800 Start 800 0 Start 0

Store Store Store
1000 End 800 800 End 0 0 End 0

200 800 0

Customer Customer Customer

Dem. 9900 Req. 15300 Req. 12600

Rec. 9900 Rec. 10800 Rec. 10000
Short. 0 Short. 4500 Short. 2600

Figure 4. Flow balancing of weights during the first three periods.

enforced to fulfill the ending inventory of 1000 kg which increases the total
shortage of the three customers to 8700 kg. So, the overall service level is lowered
by (8700/68,400) × 100 = 12.72% to be 87.28% as mentioned above.

5. Computational Results and Analysis

Through this section, the effect of the deviation percentages on the different ob-
jectives is discussed. The three objectives percent deviation taken in this study
are 0, 5, 10, and 15 that gave a combination of 64 for different values of the al-
lowable percent deviation for each objective. The results of the 64 cases are pre-
sented in Table 3 which is divided into three parts for the values of each objec-
tive for each case. Through all cases, it may be noticed that the percent deviation
of the last objective (OSL in these cases) almost have no effect on the results of

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 M. S. Al-Ashhab et al.

Period # 4 Period # 5 Period # 6

Supplier Supplier Supplier

10000 10000 10000 10000 10000 10000

Factory Factory Factory

10000 0 10000 10000 0 10000 10000 1000 9000

0 Start 0 0 Start 0 1000 Start 0

Store Store Store
0 End 0 0 End 0 1000 End 1000

0 0 0

Customer Customer Customer

Req. 16100 Req. 12400 Req. 17700

Rec. 10000 Rec. 10000 Rec. 9000
Short. 6100 Short. 2400 Short. 8700

Figure 5. Flow balancing of weights during the last three periods.

Table 3. The resulted optimal objectives values of the 64 cases.

Profit Values

Total Cost Deviation %

Profit Dev. % OSL Dev. %
0% 5% 10% 15%

0 0 - 15 3,053,854 3,053,854 3,053,854 3,053,854

5 0 - 15 2,901,186 3,013,381 2,911,892 2,916,762

10 0 - 15 2,748,476 3,009,926 2,965,211 2,856,811

15 0 - 15 2,595,779 3,005,124 2,990,731 2,856,811

Total Cost Values

Total Cost Deviation %

Profit Dev. % OSL Dev. %
0% 5% 10% 15%

0 0 - 15 1,496,146 1,496,146 1,496,146 1,496,146

5 0 - 15 1,466,414 1,536,619 1,595,608 1,595,608

10 0 - 15 1,440,774 1,511,724 1,584,789 1,592,889

15 0 - 15 1,417,521 1,488,376 1,559,269 1,592,889

OSL Values

Total Cost Deviation %

Profit Dev. % OSL Dev. %
0% 5% 10% 15%

0 0 - 15 87.3 87.3 87.3 87.3

5 0 - 15 83.6 87.3 87.3 87.3

10 0 - 15 80.0 87.3 87.3 87.3

15 0 - 15 76.9 87.0 87.3 87.3

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M. S. Al-Ashhab et al.

the model. So, the effect of other deviation on the value of the objectives is dis-
cussed and analyzed.
The effect of the cost percent deviation and profit percent deviation on the
profit (The first objective) values is depicted in Figure 6. It is clear to notice that,
at zero profit percent deviation, the profit value does not change by changing the
cost percent deviation which is logic where there is no possibility to reduce the
achieved profit to get more optimal values for the total cost. Increasing of the
profit percent deviation reduces its values.
Figure 7 represents the effect of the cost percent deviation and profit percent
deviation on the total cost (The second objective). It can be noticed that, at zero

Figure 6. The effect of the cost percent deviation and profit percent deviation on the
profit values.

1620000
1600000
1580000
1560000
Total Cost Value

1540000
1520000 0%
1500000
5%
1480000
1460000 10 %
1440000 15 %
1420000
1400000
0 5 10 15 20

Cost % Deviation

Figure 7. The effect of the cost percent deviation and profit percent deviation on the total
cost values.

184
 M. S. Al-Ashhab et al.

profit percent deviation, the total cost value does not change by changing the
cost percent deviation which is logic where there is no possibility to get more
optimal values by reducing the achieved profit. Increasing of the profit percent
deviation decreases the total cost values while increasing of the total cost percent
deviation increases the total cost values as shown in Figure 7 and increases the
profit values as shown in Figure 6.
Figure 8 represents the effect the cost percent deviation and profit percent
deviation on the OSL (The third objective). It can be noticed that, at zero profit
percent deviation, the OSL value does not change by changing the cost percent
deviation which is logic for the same reasons mentioned before. Increasing of the
profit percent deviation decreases the OSL values while increasing of the total
cost percent deviation increases the OSL.

6. Conclusions and Future Recommendations

The developed model efficacy and efficiency are verified through a general ex-
ample representing a general case of a factory with assumedinitial and ending
inventory values for all products. The model is a general one and may be
customized easily to many real cases. The behaviour of the model is analysed
and the logicality of its results are proved.
The developed model is capable of optimizing production planning for multi-
objectives ordered according to their priorities to the planner.
The model is capable to solve larger problems as compared to the problems
considered in the present work.

88.0

86.0

84.0
OSL Value

0%
82.0
5%
10 %
80.0
15 %

78.0

76.0
0 5 10 15 20

Cost % Deviation

Figure 8. The effect of the cost percent deviation and profit percent deviation on the OSL
values.

185
M. S. Al-Ashhab et al.

The performance of the factory is affected by the ordering of its objectives in

addition to the allowable deviation of them.
The developed model dealt with deterministic demand and it is recommended
to tackle the stochastic one. Also, it is recommended to solve the same problem
using different methods and comparing the results to clarify the advantages and
disadvantages of each one.

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