A simulation-optimisation approach for supply chain network design under supply and demand uncertainties

We investigate a three-echelon stochastic supply chain network design problem. The problem requires selecting suppliers, determining warehouses locations and sizing, as well as the material flows. The objective is to minimise the total expected cost. An important feature of the investigated problem is that both the supply and the demand are uncertain. We solve this problem using a simulation-optimisation approach that is based on a novel hedging strategy that aims at capturing the randomness of the uncertain parameters. To determine the optimal hedging parameters, the search process is guided by particle swarm optimisation procedure. We present the results of extensive computational experiments that were conducted on a large set of instances and that provide evidence that the proposed hedging strategy constitutes an effective viable solution approach.     

A distributed approximation approach for solving the sustainable supply chain network design problem

This paper introduces a comprehensive Mixed Integer Linear Programming (MILP) model for a sustainable supply chain network design problem, and an efficient Distributed Approximation Approach (DAA) to solve it approximately. We study a multi-echelon, multi-product and multi-modal supply chain with different transportation modes. Besides relevant costs in the supply chain such as procurement, production and distribution cost, we also explicitly consider the environmental footprint, represented by carbon emissions and water consumption from production and transportation. The approximation approach is a decomposition-based method. First, the original problem is divided into a partner selection sub-problem and a transportation planning sub-problem. Then multiple filter mechanisms are used to remove potentially infeasible solutions, and an approximate value of the objective function is calculated for each of the remaining solutions to perform a further selection. The one with the lowest approximation is chosen to be applied with a branch-and-bound method. Finally, the algorithm is paralleled and implemented in Apache Spark distributed computing framework to further improve efficiency. Experimental results show that the proposed DAA can provide high quality solutions compared to the optimal solutions of the MILP model with mostly a negligible relative gap and solve large instances in much shorter time than CPLEX. Moreover, in our numerical study, we also compare the results of our model with another version of the model that does not take the environmental footprint into consideration. The results show that explicitly incorporating environmental footprint results in a substantial decrease of CO₂ emissions and water consumption at a negligible cost increase. This insight may be of interest to managers and other decision makers and policy makers.     

A fuzzy technique for supply chain network design with quantity discounts

This paper proposes a hierarchical technique for Supply Chain Network (SCN) efficiency maximisation under uncertainty composed of three steps. The first step extends a previous fuzzy cross-efficiency Data Envelopment Analysis approach, originally intended for suppliers’ selection, in order to evaluate and rank all the actors in each SCN stage under conflicting nondeterministic criteria. Afterwards, a fuzzy linear integer programming model is stated and solved for each pair of subsequent SCN stages to determine the quantities required from each stakeholder to maximise the overall SCN efficiency while satisfying the estimated demand and respecting the nodes capacity. Finally, a heuristics is applied to limit the exchange of small quantities in the SCN, in which the trade is not economically convenient according to quantity discounts. An illustrative example from the literature shows the technique effectiveness.     

Blood supply chain network design considering blood group compatibility under uncertainty

This paper addresses the design of a blood supply chain (SC) network considering blood group compatibility. To this aim, a bi-objective mathematical programming model is developed which minimises the total cost as well as the maximum unsatisfied demand. Due to uncertain nature of some input parameters, two novel robust possibilistic programming models are proposed based on credibility measure. The data of a real case study are then used to illustrate the applicability and performance of the proposed models as well as validating the proposed robust possibilistic programming approach. The obtained results show the superiority of the developed models and significant cost savings compared to current existed blood SC network.     

Modelling and solving spare parts supply chain network design problems

Spare parts are key operational assets in order to minimise unexpected equipment downtimes that may significantly impact a company’s results. The spare parts supply chain network supports the entire spare parts operations management and it is essential to achieve the planned goals. However, most of the traditional literature on spare parts management has not focused on the underlying supply chain network. Thus, this paper studies the integration of supply chain network design and control with traditional spare parts management. In particular, a generic network optimisation modelling structure is proposed, with simultaneous optimisation of warehouse locations and inventory control decisions, allowing minimising the total costs associated with the spare parts supply chain network. The generic model is specified based on three inventory control policies widely employed in the industry, which are suitable for managing a great variety of spare parts, i.e. (s, Q), (R, s, S) and (S-1, S). Furthermore, a solution approach is proposed based on Generalised Benders Decomposition. Finally, numerical results from a real-world application case in the process industry are shown and discussed.     

Methodological approaches to supply chain design1

This paper reviews methodological approaches to the design (or redesign) of the supply chain (SC), including comprehensive approaches (proposals concerning the entire process of designing the SC) and those that deal with four specific aspects of the process (definition of the SC objectives, reverse SC, finance, and generation and use of scenarios) that have a decisive influence on the whole design of the SC. The comprehensive approaches include those based on typologies of products, markets and SCs and those that propose a succession of the stages to follow through the design process. The discussion shows that the use of typologies is not adequate to face SC design and that the methods proposing a succession of stages may suit, provided that they are developed and presented in a manner appropriate to their use for practitioners. The discussion leads also to suggest several research lines.     

Multi-level supply chain network design with routing

Recently, the multi-level and multi-facility industrial problem in supply chain management (SCM) has been widely investigated. One of the key issues, central to this problem in the current SCM research area is the interdependence among the location of facilities, the allocation of facilities, and the vehicle routing for the supply of raw materials and products. This paper studies the supply chain network design problem, which involves the location of facilities, allocation of facilities, and routing decisions. The proposed problem has some practical applications. For example, it is necessary for third party logistics (3PL) companies to manage the design of the network and to operate vehicle transportation. The purpose of this study is to determine the optimal location, allocation, and routing with minimum cost to the supply chain network. The study proposes two mixed integer programming models, one without routing and one with routing, and a heuristic algorithm based on LP-relaxation in order to solve the model with routing. The results show that a developed heuristic algorithm is able to find a good solution in a reasonable time.     

Robust closed-loop supply chain network design for perishable goods in agile manufacturing under uncertainty

In this study, a general comprehensive model is proposed for strategic closed-loop supply chain network design under interval data uncertainty. The proposed model considers various assumptions such as multiple periods, multiple products, and multiple supply chain echelons as well as uncertain demand and purchasing cost. In addition, bill of materials for each product is considered via a new approach in management of forward and reverse flows of products for producing new products and reusing or disassembling returned products. Uncertainty of parameters in the proposed model is handled via an interval robust optimisation technique. The model assumptions are well matched with decision making environments of food and high-tech electronics manufacturing industries. The factors that make these two industries similar are time-dependent properties of products such as prices and warehousing lifetime period. The computational results of solving the proposed model via LINGO 8 demonstrate efficiency of the proposed model in dealing with uncertainty in an agile manufacturing context.     

A strategic model for exact supply chain network design and its application to a global manufacturer

This paper presents a comprehensive model that captures significant strategic decisions involved in designing or redesigning high-performance supply chains from the perspective of the manufacturer. The problem considers deterministic demand by multiple clients, for multiple products, over the periods of a long-term horizon. The design decisions involve selection of suppliers, establishment or resizing of production facilities and distribution centres, possible subcontracting of related activities, and selection of transportation modes and routes. The problem is formulated by a Mixed Integer Linear Programming model. Its objective is to minimise the overall costs associated with procurement, production, inventory, warehousing, and transportation over the design horizon. Appropriate constraints model the complex relationships among the links of the supply chain. The proposed model has been applied to a large case study of a global manufacturing firm, providing valuable insights into the transformation of the firm’s current supply chain network, as well as into the potential of the proposed approach.     

Review of supply chain configuration and design decision-making for new product

The nature of competitive markets continuously pushes manufacturers to develop new products to meet the increasingly diversified customer demands. Manufacturers thus have to handle the complexities generated during the total life cycles of various product types, from product design to procurement, production, marketing and recycling. Though some management practices in mass customisation help to improve the performance of manufacturing systems, there are still some fundamental problems not covered. Joint decision-making of product and supply chain design, for example, is one of them. The existing industrial practice tends to treat these two problems separately. Decoupling these two problems decrease the design complexity but may lead to suboptimal decision outcome. To enhance understanding of the interconnected decisions for supply chain management and product design, this review collects related literature on this topic and focuses on the analysis of existing papers from an operation research perspective.     

A framework for designing a supply chain distribution network

Based on the analysis of the pertinent literature, we propose a framework to serve as a guide in designing a distribution network as a component of a supply chain (SC). It consists of three steps that are common to goods and services SCs: position of the decoupling point, structure of the network, and product delivery. For each step, we take into account the peculiarities of both goods and services separately in order to establish a list of available options and evaluate their suitability in relation to the relevant factors that characterise the products and the markets.     

Designing a supply chain network for deteriorating inventory under preservation effort and trade credits

When designing a perishable goods supply chain network under trade credit arrangements, distribution companies must contend with deteriorating inventory and product preservation efforts to maximise profits. Key decisions include locating distribution centres (DCs), assigning retail stores to DCs, joint replenishment cycle time and investing in preservation technology. This paper addresses these factors from the position that as preservation effort increases, preservation technology cost increases and deterioration rate decreases. An algorithm based on piecewise nonlinear optimisation is provided for solving supply chain network design problems efficiently. In contrast to other studies that have used the approximation approach, the proposed approach solves the original problem accurately and efficiently. Numerical studies are conducted to demonstrate the solutions procedures and determine the effects of the parameters on decisions and profits. The results of this study and the proposed modelling approach are useful references for managerial decisions in designing a supply chain network the context of trade credit and inventory deterioration.     

Leagile supply chain: design drivers and business performance implications

In the context of a dynamic and hypercompetitive business environment, effective supply chain design helps organisations to align resources for improved flow of products and services and satisfy customers’ diverse needs. Scholars have proposed several mutually exclusive supply chain designs such as efficient versus responsive, and lean versus agile. Quantitative testing has revealed that supply chain designs of many firms do not match with what was conceptually expected. To address this mismatch, in this study, a new approach to supply chain leagility is introduced and the impact of uncertainty as the key design driver of supply chains on leagility is investigated. The partial least squares (PLS) was employed to analyse data collected from 299 Australian firms by administering a structured questionnaire. Results indicate that higher performance is achievable on minimising the deviation from a balanced supply chain in which aspects of both leanness and agility are equally embedded. Further, the level of uncertainty directly and positively affects the Deviation from Leagility (DFL) index.     

A new model for supply chain network design with integrated assembly line balancing decisions

Supply chain network design aims at the integration of the different actors of a supply chain within a single framework in order to optimise the total profit of the system. In this paper, we consider the integration of line balancing issues within the tactical decisions of the supply chain, and we offer a novel model and a solution approach for the problem. The new approach decomposes the problem into multiple line balancing problems and a mixed integer linear model, which is easier to solve than the previously available non-linear mixed integer formulation. The results show that the new method is able to solve previously studied models within a fraction of the reported running times, and also allows us to solve larger instances than those reported in earlier works. Finally, we also provide some analysis on the influence of the cost structure, the demand and the structure of the assembly process on the final configuration of the assemblies and the distribution network.     

Modelling of sustainable food grain supply chain distribution system: a bi-objective approach

Growing food demand, environmental degradation, post-harvest losses and the dearth of resources encourage the decision makers from developing nations to integrate the economic and environmental aspects in food supply chain network design. This paper aims to develop a bi-objective decision support model for sustainable food grain supply chain considering an entire network of procurement centres, central, state and district level warehouses, and fair price shops. The model seeks to minimise the cost and carbon dioxide emission simultaneously. The model covers several problem peculiarities such as multi-echelon, multi-period, multi-modal transportation, multiple sourcing and distribution, emission caused due to various motives, heterogeneous capacitated vehicles and limited availability, and capacitated warehouses. Multiple realistic problem instances are solved using the two Pareto based multi-objective algorithms. Sensitivity analysis results imply that the decision makers should establish a sufficient number of warehouses in each producing and consuming states by maintaining the suitable balance between the two objectives. Various policymakers like Food Corporation of India, logistics providers and state government agencies will be benefited from this research study.     

Product complexity and supply chain design

To assemble a product, each and every part is required. Hence, the more parts in the product, the greater the risk of disruption. Compared with retailers or assemblers of simple products, manufacturers of complex products are much more sensitive to supply chain delays. This heightened vulnerability to supply chain disruptions should lead complex product assemblers to design less risky supply chains. Supply chain design should depend on the complexity of the product assembled or manufactured. This paper models how product complexity drives the likelihood of disruption for given component supply chain reliabilities. The paper provides insights for supply chain design that comprehends the impact of product complexity.     

A survey of semiconductor supply chain models part I: semiconductor supply chains,strategic network design,and supply chain simulation

Supply chain management issues have become increasingly important to the semiconductor industry over the last two decades due to the global distribution of facilities and increasing numbers of firms specialising in particular stages. This series of three papers reviews the literature on modelling and analysis of the larger semiconductor supply chain. After describing the structure of semiconductor supply chains to provide context for the research efforts, we propose a classification scheme for the relevant literature. The remainder of this paper (Part I) then focuses on Strategic Network Design models for this industry, supply chain coordination through contracting and semiconductor supply chain simulation. Part II discusses Demand Planning, Inventory Management and Capacity Planning, while Part III addresses Master Planning, Production Planning and Demand Fulfilment.     

Supply chain network design with unreliable suppliers: a Lagrangian relaxation-based approach

This paper deals with the integrated facility location and supplier selection decisions for the design of supply chain network with reliable and unreliable suppliers. Two problems are addressed: (1) facility location/supplier selection; and (2) facility location/supplier reliability. We first consider the facility location and supplier selections problem where all the suppliers are reliable. The decisions concern the selection of suppliers, the location of distribution centres (DCs), the allocation of suppliers to DCs and the allocation of retailers to DCs. The objective is to minimise fixed DCs location costs, inventory and safety stock costs at the DCs and ordering costs and transportation costs across the network. The introduction of inventory costs and safety stock costs leads to a non-linear NP-hard optimisation problem. To solve this problem, a Lagrangian relaxation-based approach is developed. For the second problem, a two-period decision model is proposed in which selected suppliers are reliable in the first period and can fail in the second period. The corresponding facility location/supplier reliability problem is formulated as a non-linear stochastic programming problem. A Monte Carlo optimisation approach combining the sample average approximation scheme and the Lagrangian relaxation-based approach is proposed. Computational results are presented to evaluate the efficiency of the proposed approaches.     

A hybrid multi-stage predictive model for supply chain network collapse recovery analysis: a practical framework for effective supply chain network continuity management

In this paper, we present a multi-stage hybrid model for analysing a supply chain network (SCN) collapse recovery possibility. In the first stage of the model, we analyse the ability of an SCN to fulfil its customers required due date (RDD). As soon as the SCN defaults to timely fulfil their customers RDD, the second stage of the model is triggered to measure the collapse recovery possibility (CRP) of the SCN. Then, we calculate the final collapse recovery possibility (FCRP) of the SCN. Since the operation times, customer demand and external supply of raw material are uncertain, we use fuzzy triangular numbers to estimate the value of foregoing parameters. Consequently, we employ fuzzy program evaluation and review technique (FPERT) to calculate the completion time of SCN operations. In the third stage, for the critical elements of the SCN obtained from FPERT, the SC simulator is developed to provide a dynamic view of the SC and assesses the impact of decisions recommended by the SC fuzzy models on SC performance. Moreover, an empirical example is presented to validate the effectiveness of the proposed model. Finally, we conduct sensitivity analysis on the parameters employed in the model to analyse the behaviour of each parameter.     

Global sensitivity analysis and aggregation of risk in multi-product supply chain networks

Manufacturing firms manage complex supply chain networks which are exposed to a plethora of hazard events. An essential part of the risk management process is the calculation of the stand-alone risk exposures of the product-specific supply chains, but also of the entire multi-product system. In this paper, first, a global sensitivity analysis of the statistical supply chain risk model is conducted. This method helps the decision-makers to understand the risk of the model they are using. Second, a methodology for risk aggregation in multi-product supply chain networks is proposed. The real-world data is used to analyse and validate the model. Supply chain managers equipped with the proposed method will better cope with the risk in supply chains for different product configurations.