Heuristics-based integrated decisionsfor logistics network systems

Abstract

In the global manufacturing environment, decisions involvingproduction activities and distribution should be made in an integrative manner for substantial savings in the logistics costs. An integrated decision on production assignment, lot sizing, transportation, and order quantity for a multiple-suppliers/multiple-destinations logistics network in a global manufacturing system is discussed in this paper. The integrated decision process can be viewed as a two-layer decision. The first layer is the combined decisions of production assignment and lot sizing (APLS-M), while the second layer is the combined decisions of transportation and order quantity determination (TOO-M). A two-layer decomposition method combining two heuristics is hence developed to solve the integrated decision model (IDM-M). An assignment heuristic and a transportation heuristic are designed to solve the decision layers APLS-M and TOQ-M, respectively. Simulations were conducted on a practical example in an electronics manufacturing enterprise together with different sizes of problems. The results indicate that the two-layer decomposition method with heuristics is effective and provides a practical way to solve medium and large-scale integrated decision problems.