Economical production and transshipment policy for coordinating multiple production sites

Abstract

In this article, we study the coordination mechanism dealing with a production–transshipment policy across the multiple regions supplying multiple products. It is assumed that each production site has its own dedicated demand region consuming multiple products. The main concern is how to determine both the production quantity and the lot-apportioning policy while minimising the relevant supply chain cost. This decision issue is formulated as a non-linear mathematical model to determine several relevant decision variables. We propose the solution procedure for deriving the production–transshipment policy minimising the overall supply chain cost.

Keywords:

• multiple production sites
• inventory
• transshipment policy
• lot apportioning policy

Acknowledgements

The authors would like to thank the anonymous referees for their valuable and helpful suggestions on the earlier version of this article.