Integrated Production-Inventory-Distribution Optimization in a Multi-Echelon Supply Chain

Most companies nowadays are organized into networks of manufacturing and distribution sites that procure raw materials, process them into finished goods, and distribute the finished goods to customers. The goal is to deliver the right product to the right place at the right time for the right price. This production - distribution network is what we call "supply chains. After years of focusing on reduction in manufacturing and operating costs , companies are beginning to look into transportation costs to further reduce the costs. In the present paper an integrated view of the supply chain has been proposed. The proposed model takes into consideration the manufacturing, inventory and distribution costs involved in a supply chain consisting of multiple plants, multiple warehouses producing different products and supplying to different customers with different demands for the finished product. The proposed model is formulated to minimise the total cost of the supply chain.