This paper presents a production scheduling model in a block assembly shop in shipbuilding industry. In a block assembly shop, the most important performance criterion is load leveling, which balances manpower and work area utilization through the planning horizon. The problem is formulated as a mixed-integer nonlinear programming(MINLP) problem of which objective function is to optimize load leveling. The developed MINLP problem can not be solvable due to computational complexity. The MINLP problem is decomposed into two stage mixed-integer linear programming (MILP) problems to obtain a good solution, but the decomposed MILP problems are still computationally intractable because of combinatorial complexity. Therfore, a heuristic method using linear programming is proposed to solve two stage MILP problems sequentially. The proposed heuristic generates a good production schedule within a reasonable computation time, and it is easily applicable for establishing the production schedule in a block assembly shop in shipbuilding industry.