Optimal production schedule in a single-supplier multi-manufacturer supply chain involving time delays in both levels

Abstract

This paper considers an optimal production scheduling problem in a single-supplier-multi-manufacturer supply chain involving production and delivery time-delays, where the time-delays for the supplier and the manufacturers can have different values. The objective of both levels is to find an optimal production schedule so that their production rates and their inventory levels are close to the ideal values as much as possible in the whole planning horizon. Each manufacturer's problem, which involves one time-delayed argument, can be solved analytically by using the necessary condition of optimality. To tackle the supplier's problem involving n + 1 different time-delayed arguments (where n is the number of manufacturers) by the above approach, we need to introduce a model transformation technique which converts the original system of combined algebraic/differential equations with n + 1 time-delayed arguments into a sum of n subsystems , each of which consists of only two time-delayed arguments. Thus, the supplier's problem can also be solved analytically. Numerical examples consisting of a single supplier and four manufacturers are solved to provide insight of the optimal strategies of both levels.