Synchronized production and transportation planning using subcontracted vehicles in a production-distribution network

Effective management of interfaces between procurement, supply, production and distribution for higher efficiency in the supply chain is an important issue in global manufacturing, where the synchronization of production and transportation planning represents important savings in operational costs. This paper focuses on the synchronization of production planning and transportation planning in a production distribution network, where transportation is subcontracted to a professional transportation enterprise (PTE) for vehicle-hiring. Dynamic and flexible numbers of vehicles are used to cater for fast changing market demands. Thus, the number of vehicles to be hired is viewed from the planning point of view as an operational decision considered simultaneously with production and transportation planning. A mathematical model - SPTP/MTDS - for synchronized production and transportation planning under multiple times and direct shipping strategy (MTDS) is discussed, and a Lagrange relaxation decomposition-based two layer decision procedure (LRD-TLDP) is developed. By introducing artificial decision variables and Lagrange multipliers, SPTP/MTDS is decomposed into a production decision sub-problem (SPTP-PD), and a distribution decision sub-problem (SPTP-DD). A priority-based assignment heuristic and a partial chain-based genetic algorithm are developed to solve SPTP-PD and SPTP-DD, respectively. An illustration of the application of the model in an electronic appliance manufacturing enterprise in China is presented.