Supply Chain Network Optimization by Considering Cost and Service Level Goals

Abstract

In this study, we focus on designing the supply chain network of a company that sells households goods to its customers located in various cities of Turkey. Since the production plant of the company is fixed and cannot be changed, we divide the supply chain network design problem into two separate problems. In first problem, we focus on the network between the supplier and the production plant. This problem can be thought as a supplier selection problem and there are many qualitative and quantitative criteria, which affect this process. Therefore, we use Buckley's Fuzzy AHP algorithm, which enables us to evaluate the suppliers according to all types of criteria. In second phase of the study, we focus on the supply chain network between the production plant, warehouses and customers and develop a multi objective mathematical model. Although, the proposed mathematical model gives optimal solution for our company data within a reasonable time, large size instances cannot be solved by using this model due to the complexity of problem. For this reason, we propose various metaheuristic approaches based on tabu search and compare the results with optimal solution. Computational results show that one of our approaches gives high quality results within a reasonable time. We conclude the study by discussing the numerical results and giving some future work suggestions to interested readers.