An integrated model for a multi-product production-inventory-routing problem in a bi-echelon green supply chain

Manufacturing company’s decisions regarding the quantity of production and inventory is a production planning and inventory control problem. Decisions about transferring products are expressed as a transportation and routing problem. Considering these three problems together results in an integrated production-inventory-routing planning (PIRP) which is one of the important supply chain problems. Companies which solve their PIRP problems better can decrease the cost of their products and gain more competitive advantage compared to other competing companies. Based on today’s strict regulations, companies must take into account environmental considerations in addition to economical ones in all their processes, from production until supply. Thus, an appropriate transportation planning can prevent the excessive increase in costs and decrease environmental pollution. Therefore, this study integrates the problem of decreasing environmental pollution with PIRP and develops a green PIRP (GPIRP) problem which efficiently considers the economic and social dimensions of production and supply. This problem is modeled in an integrated manner using the MILP approach. In order to show the applicability of the developed model and its practicability of environmental aspect, a case study is conducted on Ahvaz Sugar Refinery, Iran. Finally, some managerial insights are derived from the computational results.