Abstract
In this study, two models are developed to co-ordinate both production and distribution in order to reduce the relevant costs in a supply chain. According to the functions of the distribution centre, there is a distinction between an inventory co-ordination point and an inventory storage point. The former is a cross-docking strategy, and the latter is a traditional warehousing strategy. The manufacturer has distinct production processes when co-operating with the distribution centre. Case study analysis is used to illustrate the models developed, in which the following conclusions can be obtained: the cross-docking distribution strategy will result in tremendous savings in the total system cost for the supply chain. This study makes two important contributions to the production, and logistics literature. First, the range of applications was extended by studying a new combinatorial problem that incorporates cross-docking in a supply chain environment. Second, computational performance with cross docking was evaluated. The benefit delivery policy for a distribution centre was found by means of integrating manufacturer production planning and a distribution centre delivery policy.
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