Two Mathematical Modeling Approaches for Integrating Production and Transportation Decisions in the Process Industry

In this study we focus on coordination of the production planning of finished products and intermediate products in the process industry. The problem consists of two manufacturing facilities with similar production environment, one producing the intermediates and the other producing end products that are separated by a distance. There is transportation between the facilities. The problem considered has been formulated as a Mixed Integer linear Programming problem (MIP). In this study we present, integrated approach and two-step approach to solve the production and transportation problem over the two manufacturing facilities. Our computational study, which compares the results from the two approaches, shows a significant cost reduction is achieved using the integration approach, however, the decision maker may not be able to obtain results in real time to be of any use for implementation since computational time will increase exponentially as the number of integer variables increase.