Optimization of Integrated Production and Distribution Planning In the Cement Industry with Multi-Site Plants Model

Abstract

Each stage of the supply chain must be able to maximize value to achieve supply chain profitability. Handling production planning and distribution planning as a part of the supply chain are carried out to obtain optimal strategies that increase efficiency and reduce the risk of supply chain network failure. Distribution cost problems in the fulfillment of raw materials affect the total production costs as a whole. This paper proposes an integrated production and distribution planning in a multi-site plants model, in order to obtain optimal profit from production in each plant in a different location. This model uses a raw material fulfillment multi-suppliers scheme through a mixture of internal and external sources. Mixed-integer linear programming method is used for model optimization by considering production capacity constraints, demand constraints, supply constraints, production costs, logistics costs, and product revenue. Analysis of various demand conditions was applied in the multi-suppliers scheme to see the sensitivity of the parameters.