Abstract: A method for performing exception handling operates within a computer controlled multi-step production system for producing objects. The system includes a system controller, within which reside a planner/scheduler and module controller(s). The system controller receives a stream of object specifications for objects to be produced including the jobs to which they belong. The planner/scheduler plans and schedules the jobs incrementally, and the system controller sends commands to the module controller(s) directing production of the planned and scheduled objects by production system modules. The method includes receiving notice in the system controller of a problem situation present within the multi-step production system and halting planning for the production of subsequent objects. Plans are canceled plans for all objects that have not begun production, and all objects affected by the problem situation are marked as bad objects.