Integrating transportation and production: an international study case

Abstract

The problem we study is inspired by the real case of Mesdan S.p.A., an Italian company worldwide leader in the textile machinery sector, which has two production units with two warehouses, one located in Italy (Brescia) and the other in China (Foshan). The critical point in this logistic system is the integration between production and transportation management, given the long distance between Brescia and Foshan. Shipments are performed by the means of different types of vehicles with different unit costs and significantly different lead times. Variable production costs, variable and fixed transportation costs and, possibly, inventory costs are charged in the objective function. Different production policies are compared. Our aim is to determine integrated policies that minimize the total cost of the system. We formulate integer linear programming models for the solution of these problems, and we solve the real instance and carry out a sensitivity analysis of the optimal solution.

Keywords:

• internationalization
• transportation
• production
• inventory
• integer linear programming problems
• real case

Acknowledgements

The authors wish to thank Dr. Renato Zanca (Managing Director of Mesdan) and Ing. Massimo Cavagnini (Logistics Manager in Mesdan) for his helpful support. The authors wish to thank the Associate Editor and two anonymous Referees for their useful comments and suggestions.