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Quantitative insights into the integrated supply vehicle routing and production planning problem

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  • Hein, Fanny
  • Almeder, Christian

Abstract

In this work we assess the benefits of an integrated planning approach for the supply of raw material and the subsequent production process. The supply part is concerned with the collection of raw materials from geographically dispersed suppliers, while the production planning part addresses the conversion of those raw materials into final products to satisfy customer demand. The proposed model is an extension of the model introduced by Kuhn and Liske (2011) considering dynamic demand and general structures of the bill of materials. We investigate two scenarios: one including raw material inventories at the production site, and the other supposing just-in-time (JIT) supply. Numerical experiments show that substantial cost savings are possible with an integrated planning approach compared to a classical sequential approach. The JIT scenario and situations with a rather low utilization in the production system benefit most from the integration. The proposed supply vehicle routing and production planning problem has a reverse structure unlike the well-studied production-distribution systems. Surprisingly, a sensitivity analysis on the dependency of the cost savings on different parameters show a quite similar behavior for both types of planning problems.

Suggested Citation

  • Hein, Fanny & Almeder, Christian, 2016. "Quantitative insights into the integrated supply vehicle routing and production planning problem," International Journal of Production Economics, Elsevier, vol. 177(C), pages 66-76.
    • Handle: RePEc:eee:proeco:v:177:y:2016:i:c:p:66-76
    DOI: 10.1016/j.ijpe.2016.04.014
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    Cited by:

    1. Hrabec, Dušan & Hvattum, Lars Magnus & Hoff, Arild, 2022. "The value of integrated planning for production, inventory, and routing decisions: A systematic review and meta-analysis," International Journal of Production Economics, Elsevier, vol. 248(C).
    2. Neves-Moreira, Fábio & Almada-Lobo, Bernardo & Cordeau, Jean-François & Guimarães, Luís & Jans, Raf, 2019. "Solving a large multi-product production-routing problem with delivery time windows," Omega, Elsevier, vol. 86(C), pages 154-172.
    3. Tristan Becker & Bastian Bruns & Stefan Lier & Brigitte Werners, 2021. "Decentralized modular production to increase supply chain efficiency in chemical markets," Journal of Business Economics, Springer, vol. 91(6), pages 867-895, August.
    4. Fokkema, Jan Eise & Land, Martin J. & Coelho, Leandro C. & Wortmann, Hans & Huitema, George B., 2020. "A continuous-time supply-driven inventory-constrained routing problem," Omega, Elsevier, vol. 92(C).
    5. Chitsaz, Masoud & Cordeau, Jean-François & Jans, Raf, 2020. "A branch-and-cut algorithm for an assembly routing problem," European Journal of Operational Research, Elsevier, vol. 282(3), pages 896-910.
    6. Bertazzi, Luca & Laganà, Demetrio & Ohlmann, Jeffrey W. & Paradiso, Rosario, 2020. "An exact approach for cyclic inbound inventory routing in a level production system," European Journal of Operational Research, Elsevier, vol. 283(3), pages 915-928.
    7. Masoud Chitsaz & Jean-François Cordeau & Raf Jans, 2019. "A Unified Decomposition Matheuristic for Assembly, Production, and Inventory Routing," INFORMS Journal on Computing, INFORMS, vol. 31(1), pages 134-152, February.

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