The effect of updating lead times on the performance of hierarchical planning systems

In this study, our concern is to show the effect of updating lead times on the performance of a two-level hierarchical planning system. Lead times are updated by taking periodic feedbacks of the most recent information from the production environment and using this information in estimating lead times for planning the future production orders. A simulation model is used based on a multistage production planning and scheduling environment where the components are manufactured in a general job shop and final products are manufactured in a flow shop. Our results demonstrate that under certain conditions frequent updates of lead times will lead to uncontrolled production system with erratic and very long lead times.