Supply chain production-distribution planning: an integrated approach

This study focuses on a supply chain network design problem considering the integration of the production and distribution networks to make decisions related to the facility location, facility capacity, product allocation, and supplier selection. The multi-echelon structure includes suppliers, sub-assemblers, factories, external warehouses, domestic and overseas customers, with bill of materials, multi-commodity, and multiple periods consideration. The objective is to minimise the total production network cost, including fixed opening, fixed capacity installation, production, transportation, and procurement costs, as well as transportation and warehousing costs for the distribution network. A mixed integer linear programming model that integrates the production and distribution networks design is formulated to demonstrate the efficiency of the network design decision when the two networks are combined and solved at once. Additionally, a sensitivity analysis of product demand and all unit cost components is performed to analyse the impact of different parameter values on the optimal result.