A hierarchical process industry production-distribution planning model

Global and multinational companies are subject to government regulations in addition to other international uncertainties due to operation in diverse geographic locations. Such government regulations often affect the cost of raw materials adversely which in turn creates adverse impact on product cost and forces the decision makers to re-evaluate current production-distribution plan. This paper presents an integrated supply chain model for simultaneous strategic and operational planning of a strategic business unit (SBU) in a global supply chain affected by government regulations. The model incorporates impact of changes in cost of inputs on expected product cost and solves for an optimal strategic and operational plan for the entire supply chain. In addition, the model includes exchange rates, border crossing costs and solves a multi-period model with due consideration of uncertainties in demand and transportation time.