Balancing Production and Distribution in Paper Manufacturing

A paper manufacturing plant minimizes its production cost by using long production runs that combine the demands from its various customers. As jobs are completed, they are released to distribution for delivery. Deliveries are made by railcars, each of which is dedicated to one customer. Long production runs imply that maximizing railcar utilization requires holding the cars over several days or holding completed jobs within the loading facility. Each of these methods imposes a cost onto the distribution function. We find how distribution can minimize its cost, given production's schedule. We then consider the problem of minimizing the company's overall cost of both production and distribution. A computational study using general data illustrates that the distribution cost is reduced by 25.80% through our proposed scheme, and that the overall cost is reduced an additional 4.40% through our coordination mechanism. An optimal algorithm is derived for a specific plant's operations.