Operations planning in a supply chain system with fixed-interval deliveries of finished goods to multiple customers

Abstract

Raw material ordering policy and the manufacturing batch size for fixed-interval deliveries of finished goods to multiple customers play a significant role in economically managing the supply chain logistics. This paper develops an ordering policy for raw materials and determines an economic batch size for a product at a manufacturing center which supplies finished products to multiple customers, with a fixed-quantity at a fixed time-interval to each of the customers. In this model, an optimal multi-ordering policy for procurement of raw materials for a single manufacturing system is developed to minimize the total cost incurred due to raw materials and finished goods inventories. The carried over inventory of finished goods from the previous cycle is used as initial finished goods inventory, resulting in shifting the production schedule ahead for the next cycle. A closed-form solution to the problem is obtained for the minimal total cost. The algorithm is demonstrated for multiple customer systems.