Integrated Shipment and Production Planning: A mixed-integer linear programming approach with multiple suppliers and Due Dates

Planning of production orders in an assembly-based industry highly depends on the available components. Typically, the production plan is followed by a material requirement planning to ensure the availability of the required component and order the needed quantities from suppliers. This is why routing these elements and their availability greatly impacts the production plan and vice versa. The coordination of both plans simultaneously can improve the quality of the planning decisions and reduce operational costs. This research studies the effect of integrating routing decisions with the production plan considering environmental impact. We developed a mixed integer linear programming model; the objective function of the problems includes the operational inbound routing costs, the holding cost of components in the manufacturing site’s inventory, the lateness cost of the production order, and minimizing greenhouse gas emissions. Our study is exemplified in a numerical example where we present three different scenarios, highlighting how prioritizing the manufacturing site’s different objectives can directly impact the production plan of the manufacturing orders.