Using Multi-Period Optimization to Parameterize a Short-Term Order Release Mechanism

We design a novel order release system by combining a multi-period optimization model for order release planning (allocated clearing function model) with a short-term order release mechanism (LUMS). The former performs mid-term release/production planning while the latter controls order releases in the short term. The LUMS parameters are derived from the planning model in a consistent manner that provides the coupling of medium- and short-term level. Preliminary numerical experiments indicate that this approach substantially improves due date performance and cycle times at the cost of a moderate increase in FGI compared to a stand-alone allocated clearing function model.