Model of Integrated Production-Inventory-Distribution System: The Case of Billet Steel Manufacturing

A significant phase of billet steel manufacturing is the cooling process. This phase may be completed in the finished goods warehouse and it must meet both production optimization and customer needs. The fluctuation of customer demand and production process in this phase may cause some problems of production schedule and inventory of billet steel. The decreasing of customer demand can increase the inventory level in finished goods warehouse. Therefore, the company need to consider a production planning that gives an optimum decision of billet steel production schedule. In this paper, a mathematical model of integrated production-inventory distribution system of billet steel will be proposed. The model is used to find the optimal production schedule of billet steel, based on the relevant parameters of the productive system, such as: set-up time, processing times, and demand profile. The study is completed by a case study to investigate the proposed model.