BUS606: Operations and Supply Chain Management

Many companies are enhancing their competitiveness by offering Just-in-Time (JIT) delivery. Costs or penalties are incurred by delivering an order either earlier or later than the customer's due-dates. Besides, maintaining short response time from order acceptance to final delivery is one of the key competitive advantages. Thus, many companies deliver products to customers directly after production without holding finished product inventory. This is particularly true for the industries with short product life cycle, such as consumer electronics manufacturing, ready-mix concrete supplying, and food catering. In order to improve customer service and reduce production and transportation costs, scheduling of assembly manufacturing and transportation should be synchronized. 

Nowadays, due to the professional services provided by third party logistics (3PL) provider, it is more efficient to outsource the transportation or distribution to 3PL. There are two types of operations. If 3PL only serves one customer, the schedule of 3PL's vehicle is determined by the order completion time in manufacturing. This type of operation is particularly true for 3PLs that providing road transportation services. On the hand, if 3PL provides services to more than one manufacturer, the departure and arrival time of the vehicle is determined by 3PL rather than by the manufacturer. In addition, the unit transportation cost of each vehicle varies. The manufacturer can book capacity on the available vehicles accordingly. Then, decision on allocation of orders to the vehicles is made to utilize the booked capacity efficiently. The typical case is the air-cargo transportation service provided by cargo airlines. Motivated by above application, this chapter studies the problem of synchronized scheduling of assembly manufacturing and transportation in the make-to-order (MTO) consumer electronics supply chain (CESC). In this context, materials or components are kept in inventory before assembly. Upon reception of customer orders, the materials are transferred to manufacturing job shop. Through several processes such as assembly, testing, packing, the assembly manufacturing is completed. Then, the order is transported to customers directly by the vehicle of 3PL. Chen and Vairaktarakis addressed the integrated production transportation scheduling problem considering the first type of 3PL operations, which is mentioned above. Conversely, the second type of 3PL operations is considered in this chapter. 

The objective of this problem is first to determine appropriate allocation of orders to available vehicle capacities to minimize total delivery cost which consists of transportation cost, delivery earliness penalty cost, and delivery tardiness penalty cost. The allocation is constrained by production capacity. In other words, manufacturing of orders should be completed before the departure time of the vehicle that the order allocated to. Then, the schedule of assembly manufacturing is determined to make sure that each order is completed on time, while the order waiting time before transportation is minimized. According to Li et al., the solution method consists of two phases. A network representation of the two stage decision model is shown in Figure 1. 

Figure 1. Two stage decision model in CESC 

In the first phase, the proposed Integer Linear Programming (ILP) model will run for the transportation issues of the outbound logistics assuming that the number of completedcustomers'-orders are available and the production rate of assembly manufacturing is fixed and known. In the second phase, using the above optimal decision obtained for the outbound logistics, i.e., the flight wise customers' orders movement strategy, an efficient release control policy is decided for the assembly manufacturing based on the available assembly capacity. 

The 3PL transportation allocation problem and the assembly scheduling problem formulated in this work are based on the following assumptions: 

• Decisions of transportation allocation and assembly scheduling are for the orders accepted in the previous planning periods. 
• All the packed products have same or similar dimensions. 
• Business processing time and cost, together with loading time and loading cost for each vehicle are included in the transportation time and transportation cost. 
• Vehicle departure time is taken as the time that 3PL's vehicle set out from the manufacturer's plant. Vehicle arrival time is taken as the time that the vehicle reaches customer. 
• Orders released into production facility for the planning period are delivered within the same planning period which means there are no production backlogs. 
• For assembly manufacturing, setup time is included in the processing time. 
• Assembly flow shop consists of single machine. The machine can process only one part at a time.
• There are no machine breakdowns and preemptions.
• Total manufacturing time of an order is directly proportional to the order's quantity. 
• Waiting penalties for orders before transportation are order independent, i.e., they are not determined based on any job characteristics.
• The starting time of the planning period is set equal to zero. 

Source: Kunpeng Li and Appa Iyer Sivakumar, https://openresearchlibrary.org/content/a7cdb685-0a75-45dd-b097-f3c5e8f34f28
This work is licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 License.