Strategic planning of production and distribution facilities-An application of mixed-integer programming

This paper describes an application of integer programming to a problem concerning a large manufacturing organisation facing the prospect of rationalising its facilities. Superimposed on dichotomies in production costs in its various factories was the highly seasonal nature of both demand and availability of inputs to the factories, and the relatively high cost of warehousing and distribution. The paper describes the formulation of the model and its solution using mixed-integer programming. The paper also outlines possibilities for extending the model to more general manufacturing and logistics problems.