Research On IPID Optimization Methods Under Vendor-Managed Inventory Policies

Managing operations in today's competitive marketplace is posing significant challenges. The traditional thought was that there were so many conflicts in the multiple demands on the operations function that trade-offs were made in achieving excellence in one of these dimensions, such as the production, inventory, distribution. But under today's competitive environment, enterprises want to increase its competition ability, this indicates that the dimensions of production, inventory and distribution are not to be traded-off against one another, but need to be simultaneously prioritized. In response to this, operations managers have to focus their attention on integration of multiple dimensions, and treat all of dimensions as a whole, this force companies to search for ways to integrate resources of supply chain and itself continuously. Optimization models and algorithms, decision support systems and computerized analysis tools are examples of approaches taken by companies in an attempt to improve their operational performance and remain competitive under the threat of increasing competition.In this paper, a complex Integrated Production Inventory Distribution Problem (IPID) is considered where vendor produces items, and then shipping to a set of customers via third party logistics. Modeling proposed in this paper is based on Vendor-Managed Inventory (VMI) policies, under which policy; distortion of demand information (known as bullwhip effect) transfer from the downstream supply-chain member to the upstream member is minimized. Furthermore, a supplier has the liberty of controlling the downstream replenishment decisions rather than filling orders as they are placed. Thus, the approach offers a framework for synchronizing production inventory and distribution systems. The purpose of this paper is to optimize the scheduling of production and transportation and decrease the system cost.From the viewpoint of the overall system, the model is an integrated production, inventory and distribution model, of which the production and the transportation are synchronized via the inventory function at the supplier. From the whole decision making procedures, it involves two stages decisions, i.e. production decision and transportation decision, which are interfaced and synchronized via inventory decision. The production decision concerns with which product are assigned to produce at which unit time in what quantity within the production capacity with the aims of minimum production and inventory costs occurred at the supplier. The distribution decision tries to determine which product are assigned to which unit time in what quantity for shipping to each destinations by the third party logistics services towards minimum distribution related costs taking into account the synchronization with the production decision. Thus, the synchronization is means to bridge the gap between the production decision and the transportation decision, it is the key to solve IPID problem.In this paper, the traditional approach to the analysis of production, inventory and distribution operations is inherited. This approach is based on the integration of decisions of different functions (e.g., production planning, distribution, inventory management, etc.) into a single optimization model. The basic idea behind this approach is to simultaneously optimize decision variables of different functions. This paper proposes Tabu Search algorithms for this problem, and compare with the Make-To-Order policies, the result shows the benefits of IPID underVMI policies.