An Optimization Model for Die Sets Allocation to Minimize Supply Chain Cost

In this paper, a novel mixed-integer programming model is developed to optimally assign the die sets to candidate plants to minimize the total costs. The total costs include freight shipping stamped parts to assembly plants, die set movement, outsourcing, and utilization. Therefore, the objective function is weighted multi-criteria and it takes into consideration some of the key constraints in the real-world condition including “must-move die sets”. An optimization tool has been developed that takes several inputs and feeds them as the input to the mathematical model and generates the optimal assignments with the directional costs as the output. The tool has been tested for several plants at Ford and has proved its robustness by saving millions of dollars. The developed tool can easily be applied to other manufacturing systems and original equipment manufacturers (OEMs).