Combining optimisation and simulation for steel production scheduling

Purpose - Scheduling problems in steel plants tend to be difficult and require complex algorithms due to many constraints. An approach is presented where only the main constraints are included in the scheduling algorithm. The schedule is validated using a discrete-event simulation model that includes additional detail. Design/methodology/approach - The combined approach is utilised for production scheduling in a steel mill in Finland. Operational performance of the steel mill is measured before and after software installation. The paper presents the scheduling environment, the software application and the resulting increase of production. Findings - Case experiences indicate that combining optimisation techniques with simulation is beneficial. The optimisation can be kept simpler as validation with a simulation model increases the credibility and accuracy of the resulting schedule. During software development and testing, the simulation model offered a testing environment for the optimisation algorithm. Practical implications - The case implementation was a success that increased production without making trade-offs with other production goals. Company management estimate the productivity increase directly caused by the project to be worth (sic)2,500,000 annually. Originality/value - The paper presents a successful application of simulation for schedule validation in a complex and demanding environment.