A Multi-Objective Model for Location-Allocation Problem in a Supply Chain

The fast changing and dynamic global business environment require companies to plan their entire supply chain from the raw material supplier to the end customer. In this paper, we design an integrated supply chain including multiple suppliers, multiple factories, multiple distributors, multiple customers, multiple products, and multiple transportation alternatives. A new multi-objective mixed-integer nonlinear programming model is proposed to deal with this facility location-allocation problem. It considers two conflicting objectives simultaneously, and then the problem is transformed into a multi-objective linear one. The first objective function aims to minimize total losses of the supply chain including raw material purchasing costs, transportation costs and establishment costs of factories and distributions. The second objective function is to minimize the sum deterioration rate of end products and raw materials incurred by transportation alternatives. Finally, the proposed model is solved as a single-objective, mixed-integer, programming model applying the Global Criteria Method. We test their model with numerical example and the results indicate that the proposed model can provide a promising approach to fulfill customer demand and design an efficient supply chain.

Keywords:

Supply chain design , Facility location-allocation , optimization , Global Criteria Method , Multi-objective Programming