Abstract: This paper studies the integrated production-dis tribution operation problem in supply chain network composed of single plant,multiple products and multiple distribution centers.An integrated multi-period model is proposed using mixed integer programming approach,whose aim is to optimize production lot size,inventory and vehicle schedule in the system simultaneously.Lagrange relaxation heuristic algorithm is designed to solve the model by equivalent transformation.The computational result of numerical example validates that the algorithm is effective and shows that integrated decision can remarkably reduce the supply chain cost.