Coordination of production and distribution planning. (English) Zbl 0805.90051

Summary: This paper is a computational study to investigate the value of coordinating production and distribution planning. The particular scenario we consider concerns a plant that produces a number of products over time and maintains an inventory of finished goods at the plant. The products are distributed by a fleet of trucks to a number of retail outlets at which the demand for each product is known for every period of a planning horizon. We compare two approaches to managing this operation, one in which the production scheduling and vehicle routing problems are solved separately, and another in which they are coordinated within a single model. The two approaches are applied to 132 distinct test cases with different values of the basic model parameters, which include the length of the planning horizon, the number of products and retail outlets, and the cost of setups, inventory holding and vehicle travel. The reduction in total operating cost from coordination ranged from 3% to 20%. These results indicate the conditions under which companies should consider the organizational changes necessary to support coordination of production and distribution.


90B05 Inventory, storage, reservoirs
90B06 Transportation, logistics and supply chain management
90B30 Production models
90B35 Deterministic scheduling theory in operations research
Full Text: DOI


[1] Barany, I.; Van Roy, T.J.; Wolsey, L.A., Strong formulations for multi-item capacitated lot sizing, Management science, 30, 1255-1261, (1984) · Zbl 0601.90037
[2] Bell, W.J.; Dalberto, L.M.; Fisher, M.L.; Greenfield, A.J.; Jaikumar, R.; Kedia, P.; Mack, R.G.; Prutzman, P.J., Improving the distribution of industrial gases with an online computerized routing and scheduling optimizer, Interfaces, 13/6, 4-23, (1983)
[3] Blumenfeld, D.E.; Burns, L.D.; Daganzo, C.F., Synchronizing production and transfortation schedules, ()
[4] Blumenfeld, D.E.; Burns, L.D.; Daganzo, C.F.; Frick, M.C.; Hall, R.W., Reducing logistics costs at general motors, Interfaces, 17, 26-37, (1987)
[5] Chandra, P., On coordination of production and distribution decisions, ()
[6] Chien, T.W.; Balakrishnan, A.; Wong, R.T., An integrated inventory allocation and vehicle routing problem, Transportation science, 23/2, 67-76, (1989) · Zbl 0668.90019
[7] Cohen, M.A.; Lee, H.L., Strategic analysis of integrated production-distribution systems: models and methods, Operations research, 36, 216-228, (1988)
[8] Dror, M.; Ball, M., Inventory/routing: reduction from an annual to a short period problem, Naval research logistics, 34, 891-905, (1987) · Zbl 0647.90028
[9] Federgruen, A.; Zipkin, P., A combined vehicle routing and inventory allocation problem, Operations research, 32, 1019-1037, (1984) · Zbl 0552.90026
[10] Federgruen, A.; Rinnooy Kan, A.H.G.; Zipkin, P., Combined routing and inventory allocation problem: bounds and heuristics, ()
[11] Gillet, B.; Miller, L., A heuristic algorithm for the vehicle dispatch problem, Operations research, 22, 340-349, (1974) · Zbl 0274.90013
[12] Glover, G.; Jones, G.; Karney, D.; Klingman, D.; Mote, J., An integrated production, distribution, and inventory planning system, Interfaces, 9/5, 21-35, (1979)
[13] Leung, J.M.Y.; Magnanti, T.L.; Vachani, R., Facets and algorithms for capacitated lot sizing, Mathematical programming, 45, 331-359, (1989) · Zbl 0681.90060
[14] Lin, S.; Kerninghan, B., An effective heuristic algorithm for the travelling salesman problem, Operations research, 21, 498-516, (1973) · Zbl 0256.90038
[15] Manufacturing the right way, Fortune, 58, (May 21, 1990)
[16] Marsten, R., ()
[17] Pochet, Y.; Wolsey, L.A., Solving the multi-item lot-sizing problem using strong cutting planes, Management science, 37, 53-67, (1991) · Zbl 0727.90034
[18] Pyke, D.F., Push and pull in integrated production-distribution systems under stochastic demand, ()
[19] Rosencrantz, D.J.; Stearns, R.E.; Lewis, P.M., Approximate algorithms for the TSP, (), 33-42
[20] Wagner, H.M.; Whitin, T., A dynamic version of the economic lot size model, Management science, 5, 89-96, (1958) · Zbl 0977.90500
This reference list is based on information provided by the publisher or from digital mathematics libraries. Its items are heuristically matched to zbMATH identifiers and may contain data conversion errors. It attempts to reflect the references listed in the original paper as accurately as possible without claiming the completeness or perfect precision of the matching.