MULTI-OBJECTIVE ANALYSIS OF A PRODUCTION-DISTRIBUTION SYSTEM

Abstract: A multi-objective optimization problem deals with more than one objective. In most practical decision making problems multi-objectives are obvious. In supply chain cost and service level are two main objectives of intrest which are conflicting in nature. This type of conflicting objectives re uire multi-objective analysis. !ere our aim is to find out the better compromise solution for all objectives rather than a solution which better optimises one objective lead to poorly satisfy other objective elsewhere. "roduction and distribution operations are the two most important operational functions in a supply chain. In a supply chain typical product starts with material input# followed by production# and finally distribution of end products. The cost of a product includes not only the cost of factory resources to convert materials to a finished item but also the cost of resources to make sale# deliver the product to customers# and service the customers. Inorder to achieve the optimal operational performance in a supply chain# it is critical to integrate these two functions and plan and schedule them jointly in a coordinated manner.$arious types of coordinations are discussed in supply chain literature out of which this paper discusses about coordination of production and distribution in supply chain. "roduction and istribution operations are decoupled if there is a sufficient amount of inventory between them. !owever this leads to increased holding cost and longer lead times of products through the supply chain. %ecause of very high competition in today&s global market companies invest aggressively to reduce the inventory levels across the supply chain on one hand and more responsive to customers on the other. 'educed inventory results in closer linkages between production and distribution functions. Therefore there is a greater oppurtunity for cost saving in managing supply chain coordination than in improving individual functional areas. The basic goals in production-distribution systems are to ma(imize customer service level )i.e. to ma(imize the fraction of customer orders filled on or before their due dates* and minimize unit distribution cost. %oth of these objectives being conflicting# an optimal solution is possible only by a collaborative decision model. The supply chain synchronizes the re uirements of the customer by maintaining a balance between these multiple goals of high customer service and low unit cost. !ence# this problem re uires a multi-objective analysis. +uide: -r. $inay $ "anicker ,ubmitted by .asoda sreeram kalluri)-/01213-4*.