Assessing benefits of direct shipment in a deterministic supply chain

Abstract

Today's manufacturing establishments have to improve their operations such as logistics, distribution and inventory. Integration of production-distribution systems and scheduling are widely used in manufacturing applications to perform production in an efficient way. This study analyses the interaction and integration between the manufacturing facility and the warehouse. We are interested in an evaluation of two approaches: Direct shipment from the plant to customers vs. warehouse replenishment in an environment where Economic Lot Scheduling Problem arises. We consider a single machine in the plant which produces two seperate items. An MIP model is built up and a wide range of situations are generated with parameters having different values in order to carry out the experiments on a variety of different problems, and to make a good comparison between the two approaches. The models are run for all the problem settings on GAMS where CPLEX is invoked. During the study, the integration of GAMS and MS Excel is achieved through which GAMS directly reads the input and then writes the output data. Besides, the development of a computer programme using Visual Basic is made which creates case-based demand profiles as Excel input-data spreadsheets. This provides an effective and fast analysis tool which is especially important for people in practice. After investigations, the results are reported and analysis is presented. This study evaluates the benefits of direct shipment and consolidated warehouse shipment, in a deterministic, single-machine multi-item environment, and presents the results of the comparison and contributes to practical use and applicability of the model by the help of computer technology.