Integrated Production and Distribution Operations

The supply chain of a typical product starts with material input, followed by production, and finally distribution of the end product to customers. The cost of a product includes not only the cost of factory resources to convert materials to a finished item but also the cost of resources to make the sale, deliver the product to customers, and service the customers. Consequently, in order to reduce cost, firms have to plan all the activities in the supply chain in a coordinated manner. It is well recognized that there is a greater opportunity for cost saving in managing supply chain coordination than in improving individual function areas.