Integrated production and distribution planning for perishable products

The stages a product completes can, generally, be sorted as, beginning from the first supplier, its process on the production line in a plant and the path it reaches to customers through distributors and retailers. Every production stage handles the problem of production planning in its own stage. Since sources are limited and production costs have an enormous effect on profitability, production planning is a critical issue to work on. Distribution costs besides production costs take a large part in total costs as supply chain is considered as a whole. Distribution planning is important in terms of costs as well as production quality and meeting the customers' expectations. When planning production and distribution for a perishable product, not only costs but also distribution velocity and efficiency should be taken into account which may affect quality and sometimes even the price of the product. The studies and practices, so far, have accepted distribution and production as separate planning stages, hence the models have discussed production and distribution under separate models. Whereas distribution and production decisions affect each other successively a combined production-distribution planning would yield more reliable and productive results. Especially if the planned product loses its quality and value in time, in other words if it is a perishable product, the decisions for when and how much to produce and when and how to distribute will affect each other. This study suggests a mixed integer linear programming model which handles production and distribution of multiple perishable products, in a plant, to multiple distribution centers by multiple vehicles. The aim of the model is to minimize total production, distribution and inventory costs (total costs of fixed production, variable production, inventory in the plant, inventory in the distribution center and fixed transportation costs of using the vehicle)