Production planning and warehouse management in supply networks with inter-facility mold transfers

This paper, considers with the problem of production capacity and warehouse management in a supply network in which inter-plant mold transfers are enabled. The supply network has a limited number of very expensive molds which can be transferred from a plant to another making it possible for each plant to produce the entire product gamut. It is assumed that warehouses in this supply network can be activated and deactivated as required, and that material transfers from a warehouse to another are also possible. The objective is to develop a capacity and warehouse management plan that satisfies the expected market demands with the lowest possible cost. A mixed integer programming model for the problem is suggested and its properties are discussed. A linear programming-based heuristic that combines Lagrangian relaxation and linear programming duality to generate lower and upper bounds for the problem is proposed. Finally, based on a designed experiment the performance of the heuristic on a set of generated test problems is reported and discussed.