Joint Lot-sizing and Scheduling Optimization in Multi-echelon Supply Chains

Abstract

This Thesis addresses the Problem of Joint Lot-Sizing and Scheduling (JLSS) for a multi-echelon SC in which multiple materials are purchased from suppliers to produce multiple products. The SC is composed of two suppliers, single manufacturing facility and a distribution center. The products use the same materials with different ratios. JLSS decision is optimized using mixed integer non-linear programming model such that the demands of different products are satisfied as possible while the SC total profits are maximized. SC total profits are the difference between total SC revenues and total SC costs. SC costs include material purchasing, processing, inventory holding for both items and finished products, changeover and shortage penalty for every undelivered product. The planning horizon is composed of several periods, for each the JLSS decision variables are optimized maximizing SC profits. The effects of inventory holding, shortage penalty and changeover costs are studied for two approaches of the production schedules, namely, unconstrained and constrained levelled production approaches to production schedules. For the unconstrained production schedule, production quantities of products are allowed to differ from period to period, while the constrained production obligates the production schedule to produce equal quantity from each product each period. The effects of production capacity at the manufacturing facility and finished products inventory capacity at the DC on SC performance are also studied. Results show that flexibility in the production schedule (unconstrained levelled production approach) results in higher SC performance especially when the production capacity is limited.