IDEAS home Printed from https://ideas.repec.org/a/inm/orijoc/v32y4i2020p1012-1029.html
   My bibliography  Save this article

Production and Transportation Integration for Commit-to-Delivery Mode with General Shipping Costs

Author

Listed:
  • Feng Li

    (School of Management, Huazhong University of Science and Technology, Wuhan, Hubei 430074, P.R. China;)

  • Zhou Xu

    (Department of Logistics and Maritime Studies, Faculty of Business, Hong Kong Polytechnic University, Kowloon, Hong Kong;)

  • Zhi-Long Chen

    (Robert H. Smith School of Business, University of Maryland, College Park, Maryland 20742)

Abstract

We study an integrated production and transportation problem for a make-to-order manufacturing company that operates under the commit-to-delivery mode and uses third-party logistics service providers to deliver products to customers on or before certain committed delivery dates. Such third-party logistics service providers often provide various shipping modes with quantity discounts and different guaranteed shipping times. As a result, the company’s shipping costs need to be represented by general shipping cost functions that are typically nondecreasing, subadditive, and piecewise linear with shipping quantities, and nonincreasing with guaranteed shipping times. To the best of our knowledge, this paper is the first attempt to solve such an integrated production and transportation problem for the commit-to-delivery mode with general shipping costs. We prove that with general shipping costs, the problem is strongly N P -hard when the planning horizon consists of an arbitrary number of days. For the two-day problem, we show that it is ordinarily N P -hard, but is unlikely to have a fully polynomial time approximation scheme (FPTAS) unless N P = P . Interestingly, we find that when the unit inventory holding cost is relatively small, which is often true in practice, there exists an FPTAS for the two-day problem, the development of which hinges on a newly discovered property for minimizing the sum of two general piecewise linear functions. For the multiday problem, we develop a heuristic algorithm based on column generation, which novelly uses a dynamic program for a variant of the problem with a single customer. Results from computational experiments demonstrate that the heuristic algorithm can find near-optimal solutions with optimality gaps less than 1% in a short running time.

Suggested Citation

  • Feng Li & Zhou Xu & Zhi-Long Chen, 2020. "Production and Transportation Integration for Commit-to-Delivery Mode with General Shipping Costs," INFORMS Journal on Computing, INFORMS, vol. 32(4), pages 1012-1029, October.
    • Handle: RePEc:inm:orijoc:v:32:y:4:i:2020:p:1012-1029
    DOI: 10.1287/ijoc.2019.0935
    as

    Download full text from publisher

    File URL: https://doi.org/10.1287/ijoc.2019.0935
    Download Restriction: no
    File URL: https://libkey.io/10.1287/ijoc.2019.0935?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Zhi-Long Chen & George L. Vairaktarakis, 2005. "Integrated Scheduling of Production and Distribution Operations," Management Science, INFORMS, vol. 51(4), pages 614-628, April.
    2. Hark-Chin Hwang, 2010. "Economic Lot-Sizing for Integrated Production and Transportation," Operations Research, INFORMS, vol. 58(2), pages 428-444, April.
    3. V. Sridharan & William L. Berry & V. Udayabhanu, 1987. "Freezing the Master Production Schedule Under Rolling Planning Horizons," Management Science, INFORMS, vol. 33(9), pages 1137-1149, September.
    4. Zhou Xu, 2013. "The knapsack problem with a minimum filling constraint," Naval Research Logistics (NRL), John Wiley & Sons, vol. 60(1), pages 56-63, February.
    5. Keely L. Croxton & Bernard Gendron & Thomas L. Magnanti, 2003. "Models and Methods for Merge-in-Transit Operations," Transportation Science, INFORMS, vol. 37(1), pages 1-22, February.
    6. Chung-Lun Li & Vernon Ning Hsu & Wen-Qiang Xiao, 2004. "Dynamic Lot Sizing with Batch Ordering and Truckload Discounts," Operations Research, INFORMS, vol. 52(4), pages 639-654, August.
    7. Melo, Rafael A. & Wolsey, Laurence A., 2010. "Optimizing production and transportation in a commit-to-delivery business mode," European Journal of Operational Research, Elsevier, vol. 203(3), pages 614-618, June.
    8. Kathryn E. Stecke & Xuying Zhao, 2007. "Production and Transportation Integration for a Make-to-Order Manufacturing Company with a Commit-to-Delivery Business Mode," Manufacturing & Service Operations Management, INFORMS, vol. 9(2), pages 206-224, September.
    9. Tobias Harks & Felix G. König & Jannik Matuschke & Alexander T. Richter & Jens Schulz, 2016. "An Integrated Approach to Tactical Transportation Planning in Logistics Networks," Transportation Science, INFORMS, vol. 50(2), pages 439-460, May.
    10. Gerhard J. Woeginger, 2000. "When Does a Dynamic Programming Formulation Guarantee the Existence of a Fully Polynomial Time Approximation Scheme (FPTAS)?," INFORMS Journal on Computing, INFORMS, vol. 12(1), pages 57-74, February.
    11. Nicholas G. Hall & Chris N. Potts, 2003. "Supply chain scheduling: Batching and delivery," Operations Research, INFORMS, vol. 51(4), pages 566-584, August.
    12. Zhi-Long Chen & Guruprasad Pundoor, 2006. "Order Assignment and Scheduling in a Supply Chain," Operations Research, INFORMS, vol. 54(3), pages 555-572, June.
    13. C. P. M. van Hoesel & A. P. M. Wagelmans, 2001. "Fully Polynomial Approximation Schemes for Single-Item Capacitated Economic Lot-Sizing Problems," Mathematics of Operations Research, INFORMS, vol. 26(2), pages 339-357, May.
    14. H. Neil Geismar & Nagesh M. Murthy, 2015. "Balancing Production and Distribution in Paper Manufacturing," Production and Operations Management, Production and Operations Management Society, vol. 24(7), pages 1164-1178, July.
    15. Lap Mui Ann Chan & Ana Muriel & Zuo-Jun Shen & David Simchi-Levi, 2002. "On the Effectiveness of Zero-Inventory-Ordering Policies for the Economic Lot-Sizing Model with a Class of Piecewise Linear Cost Structures," Operations Research, INFORMS, vol. 50(6), pages 1058-1067, December.
    16. MELO, Rafael A. & WOLSEY, Laurence A., 2010. "Optimizing production and transportation in a commit-to-delivery business mode," LIDAM Reprints CORE 2193, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    17. Zhi-Long Chen, 2010. "Integrated Production and Outbound Distribution Scheduling: Review and Extensions," Operations Research, INFORMS, vol. 58(1), pages 130-148, February.
    18. H. Neil Geismar & Gilbert Laporte & Lei Lei & Chelliah Sriskandarajah, 2008. "The Integrated Production and Transportation Scheduling Problem for a Product with a Short Lifespan," INFORMS Journal on Computing, INFORMS, vol. 20(1), pages 21-33, February.
    19. Feng Li & Zhi-Long Chen & Zhi-Long Chen, 2017. "Integrated Production, Inventory and Delivery Problems: Complexity and Algorithms," INFORMS Journal on Computing, INFORMS, vol. 29(2), pages 232-250, May.
    20. Ullrich, Christian A., 2013. "Integrated machine scheduling and vehicle routing with time windows," European Journal of Operational Research, Elsevier, vol. 227(1), pages 152-165.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Li, Feng & Xu, Shifu & Xu, Zhou, 2023. "New exact and approximation algorithms for integrated production and transportation scheduling with committed delivery due dates and order acceptance," European Journal of Operational Research, Elsevier, vol. 306(1), pages 127-140.
    2. Wu, Yaobin & Huang, Jiazhou & Chen, Xiangfeng, 2024. "The information value of logistics platforms in a freight matching market," European Journal of Operational Research, Elsevier, vol. 312(1), pages 227-239.
    3. Bachtenkirch, David & Bock, Stefan, 2022. "Finding efficient make-to-order production and batch delivery schedules," European Journal of Operational Research, Elsevier, vol. 297(1), pages 133-152.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Li, Feng & Xu, Shifu & Xu, Zhou, 2023. "New exact and approximation algorithms for integrated production and transportation scheduling with committed delivery due dates and order acceptance," European Journal of Operational Research, Elsevier, vol. 306(1), pages 127-140.
    2. Ullrich, Christian A., 2013. "Integrated machine scheduling and vehicle routing with time windows," European Journal of Operational Research, Elsevier, vol. 227(1), pages 152-165.
    3. Li, Chung-Lun & Li, Feng, 2020. "Rescheduling production and outbound deliveries when transportation service is disrupted," European Journal of Operational Research, Elsevier, vol. 286(1), pages 138-148.
    4. Lixin Tang & Feng Li & Zhi-Long Chen, 2019. "Integrated Scheduling of Production and Two-Stage Delivery of Make-to-Order Products: Offline and Online Algorithms," INFORMS Journal on Computing, INFORMS, vol. 31(3), pages 493-514, July.
    5. Han, Dongya & Yang, Yongjian & Wang, Dujuan & Cheng, T.C.E. & Yin, Yunqiang, 2019. "Integrated production, inventory, and outbound distribution operations with fixed departure times in a three-stage supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 125(C), pages 334-347.
    6. S. Mohammadi & S. Al-E-Hashem & Yacine Rekik, 2020. "An integrated production scheduling and delivery route planning with multi-purpose machines: A case study from a furniture manufacturing company," Post-Print hal-02194222, HAL.
    7. Mohammadi, S. & Al-e-Hashem, S.M.J. Mirzapour & Rekik, Y., 2020. "An integrated production scheduling and delivery route planning with multi-purpose machines: A case study from a furniture manufacturing company," International Journal of Production Economics, Elsevier, vol. 219(C), pages 347-359.
    8. Liang Tang & Zhihong Jin & Xuwei Qin & Ke Jing, 2019. "Supply chain scheduling in a collaborative manufacturing mode: model construction and algorithm design," Annals of Operations Research, Springer, vol. 275(2), pages 685-714, April.
    9. Ling Liu & Sen Liu, 2020. "Integrated Production and Distribution Problem of Perishable Products with a Minimum Total Order Weighted Delivery Time," Mathematics, MDPI, vol. 8(2), pages 1-18, January.
    10. Gao, Su & Qi, Lian & Lei, Lei, 2015. "Integrated batch production and distribution scheduling with limited vehicle capacity," International Journal of Production Economics, Elsevier, vol. 160(C), pages 13-25.
    11. Guo, Zhaoxia & Shi, Leyuan & Chen, Longchao & Liang, Yong, 2017. "A harmony search-based memetic optimization model for integrated production and transportation scheduling in MTO manufacturing," Omega, Elsevier, vol. 66(PB), pages 327-343.
    12. Zhi-Long Chen, 2010. "Integrated Production and Outbound Distribution Scheduling: Review and Extensions," Operations Research, INFORMS, vol. 58(1), pages 130-148, February.
    13. Yunqiang Yin & Doudou Li & Dujuan Wang & T. C. E. Cheng, 2021. "Single-machine serial-batch delivery scheduling with two competing agents and due date assignment," Annals of Operations Research, Springer, vol. 298(1), pages 497-523, March.
    14. Azeddine Cheref & Alessandro Agnetis & Christian Artigues & Jean-Charles Billaut, 2017. "Complexity results for an integrated single machine scheduling and outbound delivery problem with fixed sequence," Journal of Scheduling, Springer, vol. 20(6), pages 681-693, December.
    15. Bachtenkirch, David & Bock, Stefan, 2022. "Finding efficient make-to-order production and batch delivery schedules," European Journal of Operational Research, Elsevier, vol. 297(1), pages 133-152.
    16. Han, Bin & Zhang, Wenjun & Lu, Xiwen & Lin, Yingzi, 2015. "On-line supply chain scheduling for single-machine and parallel-machine configurations with a single customer: Minimizing the makespan and delivery cost," European Journal of Operational Research, Elsevier, vol. 244(3), pages 704-714.
    17. B.‐Y. Cheng & J.Y.‐T. Leung & K. Li & S.‐L. Yang, 2015. "Single batch machine scheduling with deliveries," Naval Research Logistics (NRL), John Wiley & Sons, vol. 62(6), pages 470-482, September.
    18. Pedro L. Miranda & Reinaldo Morabito & Deisemara Ferreira, 2018. "Optimization model for a production, inventory, distribution and routing problem in small furniture companies," TOP: An Official Journal of the Spanish Society of Statistics and Operations Research, Springer;Sociedad de Estadística e Investigación Operativa, vol. 26(1), pages 30-67, April.
    19. Zeynep Ceylan & Hakan Tozan & Serol Bulkan, 2021. "A coordinated scheduling problem for the supply chain in a flexible job shop machine environment," Operational Research, Springer, vol. 21(2), pages 875-900, June.
    20. Feng Li & Zhi-Long Chen & Zhi-Long Chen, 2017. "Integrated Production, Inventory and Delivery Problems: Complexity and Algorithms," INFORMS Journal on Computing, INFORMS, vol. 29(2), pages 232-250, May.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:inm:orijoc:v:32:y:4:i:2020:p:1012-1029. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Asher (email available below). General contact details of provider: https://edirc.repec.org/data/inforea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.