Integrated Production-Distribution Scheduling to Optimize the Tradeoff between Order Delivery Performance and Total Cost

The scheduling problem we consider is often faced by manufacturers who make time-sensitive products such as fashion apparel and toys, which typically have large product types and sell only during specific seasons. Consider the production and distribution scheduling decisions such a manufacturer needs to make. The customers (e.g. distributors or retailers) often set due dates on the orders they place with the manufacturer and there is typically a penalty imposed on the manufacturer if the orders are not completed and delivered to the customers on time. Hence the manufacturer would like to meet the due dates as much as possible. Another factor the manufacturer has to consider is the total cost for order processing and delivery. Since the products are time-sensitive, orders are delivered shortly after their completion and thus we assume that little inventory cost is incurred. The manufacturer’s total cost is mainly contributed by production and distribution operations. The total production cost for a fixed set of orders is normally fixed and independent of the production schedule used. Therefore, the manufacturer should focus on the distribution cost when considering the total cost. Since different orders may have different due dates, delivering more orders on time might require the manufacturer to make a larger number of shipments leading to higher total distribution cost. Therefore, the manufacturer has to find a production and distribution schedule that achieves some balance between delivery timeliness and total distribution cost. In practice, the maximum tardiness of orders and the total tardiness of orders are the two commonly used measurements for delivery timeliness. They represent the worst and average service level with respect to meeting order due dates, respectively. In this paper, we focus on the maximum tardiness as the measurement for delivery timeliness.