Integrating lateral transshipment to aggregate production-distribution planning considering time value of money and exchange rate

This study investigates on integration of lateral transshipment to aggregate production-distribution planning (APDP) problems. Inventory holding, backordering and additional capacity options including overtime and changing workforce level are considered as possible strategies to meet the fluctuating and dynamic demand. In multi-site manufacturing environment, all the manufacturing sites are interconnected through a lateral transshipment strategy to serve each other. The time value of money is incorporated to each cost category for practical application of the proposed APDP model in real-world cases. Since in multi-national companies (MNCs) the decisions are considerably sensitive to the exchange rate, it is incorporated to the proposed APDP model. A goal programming approach is proposed for modelling the proposed APDP problem. Maximising the total profit and minimising the aggregate manufacturing lead time are considered as the managerial goals of the proposed APDP model. An illustrative example inspired by a real case study in an MNC is provided to show the usefulness and applicability of the proposed model.