Application of Fuzzy Optimization to Production-Distribution Planning in Supply Chain Management

Abstract

A production-distribution model has been developed that not only allocates the limited available resources and equipment to produce the products over the time periods, but also determines the economical distributors for dispatching the products to the distribution centers or retailers. The model minimizes production, inventory holding, backordering, and transportation cost while considering the time value of money. Since uncertainty is an inevitable issue of any real-world production system, then to provide a realistic model, the concept of fuzzy sets has been applied in the proposed mathematical modeling. To illustrate and show the feasibility and validity of the model, a real case analysis, which is pertaining to a mineral water bottling production factory, has been used. The case has been solved using a three-step solution approach developed in this study. The results show the feasibility and validity of the mathematical model, and also the solution procedure.