Synchronized Scheduling of Manufacturing and 3PL Transportation

Abstract

Many companies are enhancing their competitiveness by offering Just-in-Time (JIT) delivery. Costs or penalties are incurred by delivering an order either earlier or later than the customer’s due-dates. Besides, maintaining short response time from order acceptance to final delivery is one of the key competitive advantages. Thus, many companies deliver products to customers directly after production without holding finished product inventory. This is particularly true for the industries with short product life cycle, such as consumer electronics manufacturing, ready-mix concrete supplying and food catering industry (Garcia et al. 2004; Chen and Vairaktarakis, 2005; Li et al., 2005). In order to improve customer service and reduce production and transportation costs, scheduling of assembly manufacturing and transportation should be synchronized. Nowadays, due to the professional services provided by third party logistics (3PL) provider, it is more efficient to outsource the transportation or distribution to 3PL. There are two types of operations. If 3PL only serves one customer, the schedule of 3PL’s vehicle is determined by the order completion time in manufacturing. This type of operation is particularly true for 3PLs that providing road transportation services. On the hand, if 3PL provides services to more than one manufacturer, the departure and arrival time of the vehicle is determined by 3PL rather than by the manufacturer. In addition, the unit transportation cost of each vehicle varies. The manufacturer can book capacity on the available vehicles accordingly. Then, decision on allocation of orders to the vehicles is made to utilize the booked capacity efficiently. The typical case is the air-cargo transportation service provided by cargo airlines. Motivated by above application, this chapter studies the problem of synchronized scheduling of assembly manufacturing and transportation in the make-to-order (MTO) consumer electronics supply chain (CESC). In this context, materials or components are kept in inventory before assembly. Upon reception of customer orders, the materials are transferred to manufacturing job shop. Through several processes such as assembly, testing, packing, the assembly manufacturing is completed. Then, the order is transported to customers directly by the vehicle of 3PL. Chen and Vairaktarakis (2005) addressed the