Comparing sequential and integrated approaches for the production routing problem

Abstract We consider the Production Routing Problem where production planning, inventory management and distribution planning decisions must be taken. We compare two sequential approaches, one in which production decisions are optimized first and one in which distribution decisions are optimized first, with an integrated approach where all decisions are simultaneously optimized. Some properties of the solutions obtained with the different approaches are shown. Computational experiments are performed on instances of different size which are generated using two critical parameters. The numerical results illustrate the properties and show that the benefits of the integrated approach over the two sequential ones depend on the trade-off between production and distribution costs and on the trade-off between setup and inventory costs in production.