A dynamic multi-plant lot-sizing and distribution problem

Abstract

In this paper we investigate a multi-plant, production planning and distribution problem for the simultaneous optimization of production, inventory control, demand allocation and distribution decisions. The objective of this rich multi-attribute problem is to satisfy the dynamic demand of customers while minimizing the total cost of production, inventory and distribution. By solving the problem we determine when the production needs to occur, how much has to be produced in each of the plants, how much has to be stored in the warehouses and how much needs to be delivered to each customer in each period. On a large real dataset inspired by a case obtained from an industrial partner we show that our method is highly effective. Besides, we study several trade-offs in a detailed sensitivity analysis.