Title: Integrating lateral transshipment to aggregate production-distribution planning considering time value of money and exchange rate

Authors: Mohsen Moghaddam; Masoud Rabbani; Babak Maleki-Shoja

Addresses: Department of Industrial Engineering, University College of Engineering, University of Tehran, P.O. Box 11365, Tehran 4563, Iran ' Department of Industrial Engineering, University College of Engineering, University of Tehran, P.O. Box 11365, Tehran 4563, Iran ' Department of Industrial Engineering, University College of Engineering, University of Tehran, P.O. Box 11365, Tehran 4563, Iran

Abstract: This study investigates on integration of lateral transshipment to aggregate production-distribution planning (APDP) problems. Inventory holding, backordering and additional capacity options including overtime and changing workforce level are considered as possible strategies to meet the fluctuating and dynamic demand. In multi-site manufacturing environment, all the manufacturing sites are interconnected through a lateral transshipment strategy to serve each other. The time value of money is incorporated to each cost category for practical application of the proposed APDP model in real-world cases. Since in multi-national companies (MNCs) the decisions are considerably sensitive to the exchange rate, it is incorporated to the proposed APDP model. A goal programming approach is proposed for modelling the proposed APDP problem. Maximising the total profit and minimising the aggregate manufacturing lead time are considered as the managerial goals of the proposed APDP model. An illustrative example inspired by a real case study in an MNC is provided to show the usefulness and applicability of the proposed model.

Keywords: APDP; aggregate production-distribution planning; parallel multi-site manufacturing; lateral transshipment; time value of money; exchange rate; distribution planning; production planning; multinational corporations; MNCs; inventory holding; backordering; additional capacity; overtime; workforce levels; goal programming.

DOI: 10.1504/IJOR.2012.046227

International Journal of Operational Research, 2012 Vol.13 No.4, pp.439 - 464

Published online: 04 Mar 2012 *

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