Journal
PRODUCTION AND OPERATIONS MANAGEMENT
Volume 18, Issue 6, Pages 672-692Publisher
WILEY
DOI: 10.1111/j.1937-5956.2009.01029.x
Keywords
make-to-order supply chain; integrated production-distribution scheduling; order packing; heuristics; worst-case analysis
Funding
- National Science Foundation [DMI-0196536, DMI-0421637.]
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We consider an integrated production-distribution scheduling model in a make-to-order supply chain consisting of one supplier and one customer. The supplier receives a set of orders from the customer at the beginning of a planning horizon. The supplier needs to process all the orders at a single production line, pack the completed orders to form delivery batches, and deliver the batches to the customer. Each order has a weight, and the total weight of the orders packed in a batch must not exceed the capacity of the delivery batch. Each delivery batch incurs a fixed distribution cost. The problem is to find jointly a schedule for order processing and a way of packing completed orders to form delivery batches such that the total distribution cost (or equivalently, the number of delivery batches) is minimized subject to the constraint that a given customer service level is guaranteed. We consider two customer service constraints-meeting the given deadlines of the orders; or requiring the average delivery lead time of the orders to be within a given threshold. Several problems of the model with each of those constraints are considered. We clarify the complexity of each problem and develop fast heuristics for the NP-hard problems and analyze their worst-case performance bounds. Our computational results indicate that all the heuristics are capable of generating near optimal solutions quickly for the respective problems.
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