Multiperiod Supply Chain Network Investments in Labor Productivity

Anna Nagurney
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Anna Nagurney: University of Massachusetts

Chapter Chapter 8 in Labor and Supply Chain Networks, 2022, pp 181-200 from Springer

Abstract: Abstract It is a challenging time in history with the COVID-19 pandemic plus the impacts of climate change being notable with the frequency of various disasters increasing as well as their impacts. In addition, conflicts and wars around the globe are adding to disruptions of societies and economies. Nevertheless, products still must be produced, transported, and consumed in order to sustain humanity. Labor has revealed itself to be a critical resource in supply chain networks. In this chapter, a multiperiod supply chain network model is constructed, which captures labor associated with the various supply chain network activities of production, transportation, storage over time, and distribution. The model includes link labor productivity enhancements that allow for investments in enhanced safety and health of the workers. A net present value (NPV) approach is utilized with the optimization model being formulated and solved as a variational inequality problem. Complete input and solution results for a series of numerical examples are reported in terms of product flows, labor required, wages, as well as link labor productivity enhancements. The relevance of the framework is further supported through sensitivity analysis. It is found that investing in link labor productivity can benefit workers in terms of higher wages earned and the firm in terms of an increase in the optimal value of its objective function represented by the NPV, provided that consumers are aware of and responsive to such investments.

Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:spochp:978-3-031-20855-3_8

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DOI: 10.1007/978-3-031-20855-3_8

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