A transportation and production model with depot system

In automobile industry, the depot (distribution center) system is utilized to adjust the inventory and to supply the demands to the firm timely. In case of the small lot demands of short delivery cycle and the long distance from the parts manufacturer to the firm, the depot system is very important. In this paper, a model to minimize the sum of costs of holding, inventory and transportation, is proposed to determine the optimal quantities of production and transportation in JIT system. Finally, computational results that verify the effectiveness of the proposed model are demonstrated.