Integration of Network Design and Production/Distribution Planning

Jang et al. (2002): “A combined model of network design and production/distribution planning for a supply network” suggest a framework for integrating the strategic supply chain network design with the operational planning needed for production and distribution.
They make the point that strategical and operational planning should be integrated to find the optimal solution for the company. The following problems are affected.

• Network design problem from raw material suppliers to customers.
• Problem of production quota assignment, by which specific quantities are distributed to each of the
  several facilities producing the same items.
• Production planning problem, considering the global BOM relationship.


• Global capacity planning for various manufacturing facilities in the network.
• Distribution planning that determines optimal distribution channel and quantity.

Thereof the first and the fourth are strategic in nature, the second and third are tactical and the last could be classified as operational.

Framework

On top of these goals they build the following framework:
The two major modules are the “supply network design optimization module” and the “production and distribution planning module” (ppdp) these are connected via a “model management module” and a “data management module”. The overall goal of the framework is to make the decision-making easier for the responsible manager by hiding the complexity of the models and data.

Model

Next suggest specific models and solution algorithms for the network design and the ppdp module. Using Lagrangian relaxation algorithm and linear programming for the first and a genetic algorithm for the second problem.

Evaluation

I find the idea to combine strategical, tactical and operational problems in one general framework very compelling. But still there are some drawbacks in this paper.

1. The different problem types (strategic, …) are not separated clearly. There is no link between the suggested framework and these types. Strategic and operational problems can occur in each of the modules.
2. Jang et al. argue that there is a benefit from integrating the strategical and operational problems, but in their calculations they only refer to the individual planning problems (network design or ppdp). I still believe that integration improves overall performance, but there is no evidence in this paper.
3. There is not a single sign of uncertainty within this framework. All parameters are fixed and known. There is only a reference that the manager could use this framework to do scenario analysis.
4. Well last but not least, I am not sure what this article is about. Is the major goal to suggest a framework for general use? Is it a recipe for implementing a specific model within a company or is it experimental data on how different algorithms lead to different non optimal solutions?