Capacity loading and release planning with work-in-progress (WIP) and leadtimes

Traditional capacity-planning models develop production plans in consideration of costs, such as those of finished goods inventory holding and labor, in the presence of varying demand and capacity limitations. Most such models do not include the costs of work-in-process (WIP) and do not evaluate the lead time consequences of capacity loading. In this paper, a capacity and release planning model is proposed based on the concept of a clearing function that includes these features. As a result, the method constructs master production schedules that reflect capacity limitations, and release plans that incorporate lead times which vary with capacity loading.