Optimal models for a multi-stage supply chain system controlled by kanban under just-in-time philosophy

This research studies a multi-stage supply chain system that operates under a JIT (just-in-time) delivery policy. Kanbans play an important role in the information and material flows in a supply chain system. Thus, a kanban mechanism is employed to assist in linking different production processes in a supply chain system to implement the scope of JIT philosophy. For a multi-stage supply chain system, a mixed-integer nonlinear programming (MINLP) problem is formulated from the perspective of JIT delivery policy where a kanban may reflect to a transporter such as a truck or a fork-lifter. The number of kanbans, the batch size, the number of batches and the total quantity over one period are determined optimally. It is solved optimally by branch and bound method. A greedy heuristic to avoid the large computational time in branch-and-bound algorithm is developed for solving a large MINLP. Coupled with plant-wide efforts for cost control and management commitment, a logistic system for controlling the production as well as the supply chain is built, which results in minimizing the total cost of the supply chain system. The results show that the improvements in reduction of inventory, wasted labor and customer service in a supply chain are significantly accomplished through the kanban mechanism. (C) 2004 Elsevier B.V. All rights reserved.