Profit oriented supply chain network optimization


PAKSOY T., Ozceylan E., Weber G.

CENTRAL EUROPEAN JOURNAL OF OPERATIONS RESEARCH, vol.21, no.2, pp.455-478, 2013 (Journal Indexed in SCI) identifier identifier

  • Publication Type: Article / Article
  • Volume: 21 Issue: 2
  • Publication Date: 2013
  • Doi Number: 10.1007/s10100-012-0240-0
  • Title of Journal : CENTRAL EUROPEAN JOURNAL OF OPERATIONS RESEARCH
  • Page Numbers: pp.455-478
  • Keywords: Mixed integer linear programming, Profit maximization, Quality, Trade-off, Supply chain optimization, GENETIC ALGORITHM, PROGRAMMING APPROACH, PERFORMANCE, DESIGN, SELECTION, QUALITY, COST, TRANSPORTATION, METHODOLOGY, INVENTORY

Abstract

This paper proposes a novel mixed integer linear programming model to solve a supply chain network design problem. The proposed model deals with major issues for supply chains; product quality and cost. These issues are usually solved separately, but in this paper, we investigate effects of product quality on supply chain design and transportation flow. A trade-off between raw material quality, its purchasing and reprocessing costs was considered. Assuming decision maker (DM) wishes to work with a supplier which serves a low quality raw material; this raw material should be in need of reprocessing. To avoid the reprocessing costs, a supplier which serves a high quality raw material should be chosen but at this time the DM has to face a high purchasing cost. A supply chain network which consists of multiple suppliers, manufacturers, distribution centers and retailers is tried to be designed to accomplish aforementioned above trade-offs. The paper examines and discusses the relationship between product quality and supply chain design and offers several managerial insights.