A Pre-emptive Goal Programming Model for Multi-site Production and Distribution Planning

The aim of every manufacturing organization is to fulfil the demand of their customers at minimum total cost or at maximum profit. To fulfil the demand of geographically dispersed customers, manufacturing organizations need to produce products at multiple manufacturing sites located close to the customer. Although planning function in such a scenario becomes very complex, this multi-site environment has been found to improve efficiency and provide better services to customers. It involves interlinked decisions involving procurement, production and distribution at different plants and distribution sites. Production and distribution planning are very important aspects of planning in multi-site manufacturing. To compete in this globalized market, enterprises should focus on optimizing and integrating production and distribution functions simultaneously. The authors in the research work present an integrated production and distribution planning problem for a two-level supply chain consisting of multiple manufacturing sites serving multiple selling locations. The problem is formulated as a multi-objective mixed-integer programming model considering three important aspects of production and distribution planning, viz. set-up, backorder and transportation capacity. Total cost, delivery time and backlog level are the three conflicting objectives that need to be minimized. The proposed multi-objective mathematical problem is solved using pre-emptive goal programming method. The performance of the proposed model is illustrated through an example problem instance. Further analysis is conducted to visualize the effect of changing priority level on objective function and deviation variable values.