Abstract: The joint decisions of production assignment, lot sizing, transportation and order quantity for multiple products in a production-distribution network with multiple suppliers, multiple products and multiple destinations are discussed. It tries to determine assignment of production among suppliers, production lot size, transportation between suppliers and destinations, and the order quantity at the destinations. A Lagrange relaxation based two-layer decomposition (LRD) method combining several heuristics is developed to solve the joint decision model (JDM-M). The first layer is the joint decisions in assigning production and transportation flow and lot sizing (APLS-TF), and the second layer is the joint transportation and order quantity (TOQ-M) problem. Some simulations show that this LRD with heuristics is effective for solving joint decision problems, particularly for large-scale problem.

Key words: Coordination, Heuristics, Joint decisions, Production and distribution, Two layer