Treffer: Multi-period stochastic optimisation of the integrated production-inventory-distribution problem.

This paper investigates the multi-period integrated production-inventory-distribution optimisation problem of a complex supply chain under stochastic demands. The network includes heterogeneous plants with various capacities and unit production costs, distribution centers (DCs), and retailers across multiple locations. Finished products can be stored in plant warehouses or transported to DC warehouses with varying holding costs. At the end of each period, the manufacturer faces random demands from retailers, which can be fulfilled from inventories of the plants and DCs. Unfulfilled demands are backlogged incurring backlogging cost. Transportation between different locations incurs various costs. The objective is to make integrated production-inventory-distribution decisions to minimise total cost over multiple periods, consisting of production, transportation, backlogging, and holding. To address the challenges arising from intricate objective and high-dimensional stochastic demands, states, and actions, we formulate the problem as a stochastic dynamic programming model and propose stochastic dual dynamic programming (SDDP) algorithm to solve it. Using real-case-based instances derived from a beverage manufacturer, we conduct numerical experiments to evaluate the performance of the SDDP algorithm by comparing it with two benchmark approaches and the perfect information bound. Results demonstrate the SDDP algorithm reacts quickly to new information within one second and provide valuable managerial insights. [ABSTRACT FROM AUTHOR]

Copyright of International Journal of Production Research is the property of Taylor & Francis Ltd and its content may not be copied or emailed to multiple sites without the copyright holder's express written permission. Additionally, content may not be used with any artificial intelligence tools or machine learning technologies. However, users may print, download, or email articles for individual use. This abstract may be abridged. No warranty is given about the accuracy of the copy. Users should refer to the original published version of the material for the full abstract. (Copyright applies to all Abstracts.)