Solving a multi-period supply chain problem for a pulp company using heuristics—An application to Södra Cell AB
2008 (English)In: International Journal of Production Economics, ISSN 0925-5273, Vol. 116, no 1, 75-94 p.Article in journal (Refereed) Published
In this paper, the integrated planning of production and distribution for a pulp company is considered. The tactical decisions included regard transportation of raw materials from harvest areas to pulp mills; production mix and contents at pulp mills; inventory; distribution of pulp products from mills to customers and the selection of potential orders and their levels at customers. The planning period is one year and several time periods are included. As a solution approach we make use of two different heuristic approaches. The main reason to use heuristics is the need for quick solution times. The first heuristic is based on a rolling planning horizon where iteratively a fixed number of time periods is taken into consideration. The second heuristic is based on Lagrangian decomposition and subgradient optimization. This provides optimistic bounds of the optimal objective function value that are better than the LP relaxation value, which can be used as a measure of the heuristic (pessimistic) solution quality. In addition, we apply the proposed rolling horizon heuristic in each iteration of the subgradient optimization. A number of cases based on real data is analysed which shows that the proposed solution approach is simple and provides high quality solutions.
Place, publisher, year, edition, pages
Elsevier, 2008. Vol. 116, no 1, 75-94 p.
Supply chain modelling, Production planning, Heuristics, Lagrangian decomposition
National CategorySocial Sciences
IdentifiersURN: urn:nbn:se:liu:diva-14850DOI: 10.1016/j.ijpe.2008.07.010ISI: 000261007900006OAI: oai:DiVA.org:liu-14850DiVA: diva2:25349
Original publication: Helene Gunnarsson and Mikael Rönnqvist, Solving a multi-period supply chain problem for a pulp company using heuristics—An application to Södra Cell AB, 2008, International Journal of Production Economics. http://dx.doi.org/10.1016/j.ijpe.2008.07.010. Copyright: Elsevier B.V., http://www.elsevier.com/2008-09-262008-09-262014-03-07Bibliographically approved