Title: Integrated production-inventory-distribution optimisation in a multi-echelon, multi-product, multi-carrier, multi-period system

Authors: X. Yang, S.S. Heragu, G.W. Evans

Addresses: Department of Industrial Engineering, JB Speed School of Engineering, University of Louisville, Louisville, KY 40292, USA. ' Department of Industrial Engineering, JB Speed School of Engineering, University of Louisville, Louisville, KY 40292, USA. ' Department of Industrial Engineering, JB Speed School of Engineering, University of Louisville, Louisville, KY 40292, USA

Abstract: In today|s competitive business environment, companies face enormous pressure and thus they must continuously search for ways to design and manufacture new products, and distribute them in an efficient and effective manner. After years of focusing on reduction in production and operation costs, companies are beginning to look into distribution activities as the last frontier for cost reduction. In this paper, we propose an integrated production, inventory and distribution optimisation model that considers important and interrelated decisions simultaneously. For example, the model assumes that carriers have finite truckload and drivers for both inbound and outbound shipments. The integrated model is solved via modified Benders decomposition, which is a combination of Benders decomposition and a genetic algorithm. We compare the performance of the proposed algorithm with the general Benders decomposition as well as a commercial-off-the-shelf software package – LINGO. Computational results on test problems of various sizes are provided to show the effectiveness of the modified Benders decomposition algorithm.

Keywords: integrated optimisation; production; inventory; distribution; third party logistics; 3PL; Benders decomposition; genetic algorithms; GAs; integrated modelling.

DOI: 10.1504/IJVCM.2010.033616

International Journal of Value Chain Management, 2010 Vol.4 No.3, pp.267 - 287

Published online: 08 Jun 2010 *

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