The family disaggregation model of hierarchical production planning (HPP) is the problem of (0 -1) mixed integer programming that minimizes the total sum of setup costs and inventory holding costs over the planning horizon. This problem is hard in a practical sense since optimal solution algorithms have failed to solve it within reasonable computation times. Thus effective familoy disaggregation algorithm should be developed for HPP. The family disaggregation algorithm developed in this paper consists of the first stage of finding initial solutions and the second stage of improving initial solutions. Some experimental results are given to verify the effectiveness of developed disaggregation algorithm.