Sequential versus integrated optimization: Production, location, inventory control, and distribution

Maryam Darvish and Leandro C. Coelho

European Journal of Operational Research, 2018, vol. 268, issue 1, 203-214

Abstract: Traditionally, a typical approach towards supply chain planning has been the sequential one. By ignoring the links between decisions, this approach leads to each department of a company making its own decisions, regardless of what others are doing, and overlooking the synergy of a global strategy. However, companies have realized that significant improvements can occur by exploiting an integrated approach, where various decisions are simultaneously taken into consideration and jointly optimized. Motivated by a real case, in this paper we consider a production–distribution system that deals with location, production, inventory, and distribution decisions. The objective is to minimize total costs while satisfying demands within a delivery time window. To solve the problem sequentially, we exploit several commonly used procedures based on separately solving each part of the problem. The integrated problem is solved both by an exact method and a matheuristic approach. Our extensive computational experiments and analysis compare solution costs obtained from the two approaches, highlight the value of an integrated approach, and provide interesting managerial insights into the benefits of integration.

Keywords: Logistics; Integrated optimization; Sequential decision making; Delivery time window; Location analysis (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (24)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0377221718300493
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:268:y:2018:i:1:p:203-214

DOI: 10.1016/j.ejor.2018.01.028

Access Statistics for this article

European Journal of Operational Research is currently edited by Roman Slowinski, Jesus Artalejo, Jean-Charles. Billaut, Robert Dyson and Lorenzo Peccati

More articles in European Journal of Operational Research from Elsevier
Bibliographic data for series maintained by Catherine Liu ().