Profit oriented supply chain network optimization

Turan Paksoy (), Eren Özceylan () and Gerhard-Wilhelm Weber ()

Central European Journal of Operations Research, 2013, vol. 21, issue 2, 455-478

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. Copyright Springer-Verlag 2013

Keywords: Mixed integer linear programming; Profit maximization; Quality; Trade-off; Supply chain optimization (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (4)

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DOI: 10.1007/s10100-012-0240-0

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