Manufacturer’s mixed pallet design problem

We study a problem faced by a major beverage producer. The company produces and distributes several brands to various customers from its regional distributors. For some of these brands, most customers do not have enough demand to justify full pallet shipments. Therefore, the company decided to desig...

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Bibliographic Details
Published in:European journal of operational research Vol. 186; no. 2; pp. 826 - 840
Main Authors: Yaman, Hande, Şen, Alper
Format: Journal Article
Language:English
Published: Amsterdam Elsevier B.V 16.04.2008
Elsevier
Elsevier Sequoia S.A
Series:European Journal of Operational Research
Subjects:
Applied sciences
Beverage industry
Complexity
Distribution
Exact sciences and technology
Inventory control, production control. Distribution
Inventory management
Linear programming
Mathematical programming
Mixed pallet design
Operational research and scientific management
Operational research. Management science
Optimization algorithms
Pallets
Studies
Valid inequalities
Mixed pallet design
Valid inequalities
Distribution
Complexity
Backorder
Linear programming
Mixed integer programming
Trademark
Pallet
Palletization
Integer programming
Finite horizon
NP hard problem
Mixed problem
ISSN:0377-2217, 1872-6860
Online Access:Get full text
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Summary:We study a problem faced by a major beverage producer. The company produces and distributes several brands to various customers from its regional distributors. For some of these brands, most customers do not have enough demand to justify full pallet shipments. Therefore, the company decided to design a number of mixed or “rainbow” pallets so that its customers can order these unpopular brands without deviating too much from what they initially need. We formally state the company’s problem as determining the contents of a pre-determined number of mixed pallets so as to minimize the total inventory holding and backlogging costs of its customers over a finite horizon. We first show that the problem is NP-hard. We then formulate the problem as a mixed integer linear program, and incorporate valid inequalities to strengthen the formulation. Finally, we use company data to conduct a computational study to investigate the efficiency of the formulation and the impact of mixed pallets on customers’ total costs.
Bibliography:SourceType-Scholarly Journals-1
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ISSN:0377-2217
1872-6860
DOI:10.1016/j.ejor.2007.02.007