Production and outbound distribution scheduling: a two-agent approach

The problem considered is an integrated production and distribution scheduling problem with two agents: a manufacturer and a third-party-logistics provider. The manufacturer workshop is a flow-shop and the problem is to minimize a cost function composed by inventory, vehicle and tardiness penalty costs. The 3PL provider solves a vehicle routing problem for each vehicle, to minimize a total cost composed by routing costs and tardiness penalties paid to the manufacturer. A general framework is presented and a particular scenario is considered, where the manufacturer dominates and the 3PL provider adjusts. MILP models are proposed and illustrated by a numerical example.