Optimal Production-Distribution Planning in Supply Chain Management Using a Hybrid Simulation-Analytic Approach

Abstract

Production-distribution planning is the most important activity in supply chain management (SCM). To solve this planning problem, either analytic or simulation approaches have been used. However these two approaches have their own demerits in problem solving. We propose a hybrid approach which is a specific problem solving procedure combining analytic and simulation methods to solve production-distribution problems in supply chains. The machine capacity and distribution capacity constraints in the analytic model are considered as stochastic factors and are adjusted by the proposed specific process according to the results from an independently developed simulation model which includes general production-distribution characteristics.