Value of modular production concepts in future chemical industry production networks

Tristan Becker, Stefan Lier and Brigitte Werners

European Journal of Operational Research, 2019, vol. 276, issue 3, 957-970

Abstract: Shorter product life cycles in the chemical industry have led to uncertain demand in terms of volume, location and type. Modular production concepts can be used to serve such volatile customer demand more efficiently. Modular plants increase the tactical flexibility of the supply chain substantially compared to centralized production with large-scale plants. Furthermore, production facilities can be flexibly opened, deactivated and reactivated. Modular plants can be relocated in the medium term, and their production capabilities can be reconfigured via process module changes. This work proposes new mixed-integer programming formulations for the tactical planning of production networks in the chemical industry; these formulations prescribe the volume, location, and process of modular plants in the production network over a multi-period planning horizon. The economic value of modular flexibility is investigated in a case study from the chemical industry under the consideration of diverse demand structures. The results have several managerial implications for the technical implementation and development of modular production technology in the chemical industry.

Keywords: Production; Location; Chemical industry; Network design; Mixed-integer programming (search for similar items in EconPapers)
Date: 2019
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Citations: View citations in EconPapers (12)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ejores:v:276:y:2019:i:3:p:957-970

DOI: 10.1016/j.ejor.2019.01.066

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