Exact and heuristic solution approaches for integrated production and distribution problem of perishable products with customization

Recently, many firms have adopted joint production and distribution decisions for perishable products to achieve timely delivery at minimum costs and meet the requirements for high customisation more effectively. This study addresses a two-stage integrated production and distribution problem, explicitly considering that customised orders of perishable products are processed in parallel servers by scheduling in the first stage and delivered through vehicle routing in the second stage. The firm needs to assign orders to servers and vehicles, schedule the production and decide the routes for distribution to minimise the firm’s total costs and total weighted waiting costs for customers. We exploit a novel mixed-integer program to make a trade-off between cost and service for the studied problem. We first transform the program into a set-partitioning formulation. Then, we illustrate some structural properties and propose an exact algorithm using the column generation and branch and bound algorithm. We further develop some acceleration techniques and an arc-based fix and price heuristic for practical application. The experimental results show that the algorithms are efficient.