newspaper production/distribution problem, The

Journal of Business Logistics, 1996 by Hurter, Arthur P, Van Buer, Michael G

The newspaper production/distribution problem, NDP, is an example of a perishable-good production and distribution problem. We define a perishable good as one that either loses significant value if stored or a good that will cause economic loss if delivered late. Using this definition of perishability, we can classify physically robust commodities-automobile seats, vehicle transmissions, or newspapers-as perishable goods. Late delivery of car seats or vehicle transmissions may result in the shutting down of a production line, while late delivery of a newspaper may result in the loss of a customer.

There are three main categories of perishable goods: (1) goods that are perishable only when considered by the customer. For example, an automobile manufacturer is the customer for the car seats delivered by the car seat manufacturer. If the automobile manufacturer operates a JIT plant, and the car seats do not arrive on schedule, production of a particular model may be temporarily halted. Therefore, because of the tardy delivery of car seats, an economic loss is incurred. (2) Goods that are perishable only to the manufacturer. A chemical manufacturer may use a volatile substance, which it produces, in the manufacture of a certain product. Until the product is produced, the volatile substance is lost, and the manufacturer suffers a concomitant economic loss. (3) Goods that are perishable to both the manufacturer and the customer. Newspapers fall into this category. Newspaper companies cannot print the news sections of the newspaper in advance because of the requirement that news be timely. Additionally, with the increase in commuting times, especially in the large, metropolitan markets, delivery after the commuter has left home for work may mean canceled subscriptions. Therefore, NDP is the problem of distributing highly perishable products under severe time constraints.

The problem statement, which is essentially the same for each category of perishable goods is: Develop a production and distribution system so as to minimize total cost.

Costs can be divided into two major categories: (1) costs associated with the actual production and distribution activities, and (2) costs directly attributable to the perishability of either an input or an output. Category 2 costs will be accrued only if the schedule is not feasible. In the newspaper problem, an infeasible solution would be one in which not all newspapers are delivered by the deadline. The costs associated with this infeasibility may include the cost of the newspaper, a lost subscription, the cost of processing the complaint, the cost of making a special delivery, etc.

The distribution of perishable commodities has a number of features distinguishing it from other distribution operations. For example, the commodities may not be able to be produced or purchased in advance for inventory. Distribution centers rather than warehouses play an important role, and production and distribution are necessarily intimately related. In addition, the total time devoted to both production and to distribution may be severely limited thereby further tying together the design and operation of the production and distribution functions. These distinguishing features increase the complexity of the production/distribution problem for perishable goods. It is also a problem that has not been adequately addressed in the operations research or management science literature.1 We have used the home delivery of daily newspapers as an example of such a problem.

GENERAL DESCRIPTION OF THE NEWSPAPER DISTRIBUTION PROBLEM

The newspaper distribution problem involves the distribution of newspapers to home delivery subscribers at minimum cost while getting the correct edition of the paper to each subscriber on time. For a major metropolitan morning newspaper, NDP is part of the daily task of producing a total of several hundred thousand newspapers in many editions and of delivering them to home delivery customers in approximately six hours. The key timing parameters are the start of the press run, say at midnight, and the requirement that each customer receive her/his paper before, say, 6 a.m. In order to better serve their advertisers and subscribers, newspapers produce many versions (editions) of the newspaper for different demographic/ geographic regions. The products may differ in editorial content, in run of paper advertisements, and in advertising inserts.

The distribution system may have as many as three hierarchical levels. Completed or almost completed newspapers are shipped from the printing facility to distribution centers (DC's). At the DC's, the newspapers are rebundled according to home delivery carrier routes and then they are taken to drop off points, do's. The home delivery carriers pick up the newspapers at the do's and deliver them to customer homes. The design of the distribution system involves solving several location-allocationrouting and clustering problems.

There are also two sequencing problems. Since the printing facility produces several different products, there is an ideal sequence in which the production would take place in order to minimize total (including time spent on set up) time spent on production. On the other hand, some DC's may be farther from the printing facility than others. The geographic locations of the DC's suggests a preferred sequence in which the distribution system receives papers. For example, Distribution would prefer that Production produce papers for the most distant DC first. However, this production plan may not be consistent with Production's preferred sequencing. Consequently, the production and distribution operations are tightly coupled and must be modeled as such. This makes the problem substantially more difficult than if the production and distribution operations could be treated separately.