Analytical Evaluation of Hierarchical Planning Systems

Hierarchical planning systems have become popular for multilevel decision problems. After reviewing the concept of hierarchical planning and citing some examples, we describe a method for analytic evaluation of a hierarchical planning system. We show that multilevel decision problems can be nicely modeled as multistage stochastic programs. Then any hierarchical planning system can be measured against the yardstick of optimality in this stochastic program. We demonstrate this approach on a hierarchical system that can be shown to be asymptotically optimal for a job shop design/scheduling problem.