Integrated production-inventory-distribution optimisation in a multi-echelon, multi-product, multi-carrier, multi-period system
by X. Yang, S.S. Heragu, G.W. Evans
International Journal of Value Chain Management (IJVCM), Vol. 4, No. 3, 2010

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.

Online publication date: Tue, 08-Jun-2010

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