IDEAS home Printed from https://ideas.repec.org/a/gam/jmathe/v10y2022i3p498-d741813.html
   My bibliography  Save this article

A Convex Dynamic Approach for Globally Optimal Profit in Supply Chains

Author

Listed:
  • Mojtaba Azizian

    (Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran 1411713116, Iran)

  • Mohammad Mehdi Sepehri

    (Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran 1411713116, Iran)

  • Mohammad Ali Rastegar

    (Faculty of Industrial and Systems Engineering, Tarbiat Modares University, Tehran 1411713116, Iran)

Abstract

Supply chain finance aims to coordinate multiple stakeholders to maximize the flow of cash and internal and external funding along the supply chain, as shown in prior research. From a regulatory standpoint, the goal of this paper is to maximize the profitability of an entire supply chain. As a result, a constrained finite time Linear Quadratic Regulation (LQR) approach is provided for determining an entity’s optimal profit state in a supply chain. The framework is represented by discrete-time linear dynamical equations for each entity in the supply chain network, taking state and input variables into account. The problem is formulated in terms of a convex quadratic programming optimization for which several numerically efficient algorithms are readily available. In order to validate the approach, it was tested on two topologies. The first topology is a fully connected supply chain with six nodes; the second is a simple topology based on the Iranian pharmaceutical supply chain. The results indicate that the proposed approach successfully planned production and financing decisions within the simulated supply chain and obtained globally optimal profit for all supply chain stakeholders.

Suggested Citation

  • Mojtaba Azizian & Mohammad Mehdi Sepehri & Mohammad Ali Rastegar, 2022. "A Convex Dynamic Approach for Globally Optimal Profit in Supply Chains," Mathematics, MDPI, vol. 10(3), pages 1-19, February.
    • Handle: RePEc:gam:jmathe:v:10:y:2022:i:3:p:498-:d:741813
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2227-7390/10/3/498/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2227-7390/10/3/498/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Wuttke, David A. & Blome, Constantin & Henke, Michael, 2013. "Focusing the financial flow of supply chains: An empirical investigation of financial supply chain management," International Journal of Production Economics, Elsevier, vol. 145(2), pages 773-789.
    2. WUTTKE, David A & BLOME, Constantin & HENKE, Michael, 2013. "Focusing the financial flow of supply chains: an empirical investigation of financial supply chain management," LIDAM Reprints CORE 2601, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    3. A Harrison & C New, 2002. "The role of coherent supply chain strategy and performance management in achieving competitive advantage: an international survey," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 53(3), pages 263-271, March.
    4. Virgil Popa, 2013. "The Financial Supply Chain Management: a New Solution for Supply Chain Resilience," The AMFITEATRU ECONOMIC journal, Academy of Economic Studies - Bucharest, Romania, vol. 15(33), pages 140-153, February.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Yuting Li & Tong Chen & Baogui Xin, 2016. "Optimal Financing Decisions of Two Cash-Constrained Supply Chains with Complementary Products," Sustainability, MDPI, vol. 8(5), pages 1-17, April.
    2. Lele Zhou & Maowei Chen & Hyangsook Lee, 2022. "Supply Chain Finance: A Research Review and Prospects Based on a Systematic Literature Analysis from a Financial Ecology Perspective," Sustainability, MDPI, vol. 14(21), pages 1-27, November.
    3. Jia, Fu & Blome, Constantin & Sun, Hui & Yang, Yang & Zhi, Bangdong, 2020. "Towards an integrated conceptual framework of supply chain finance: An information processing perspective," International Journal of Production Economics, Elsevier, vol. 219(C), pages 18-30.
    4. Wetzel, Philipp & Hofmann, Erik, 2019. "Supply chain finance, financial constraints and corporate performance: An explorative network analysis and future research agenda," International Journal of Production Economics, Elsevier, vol. 216(C), pages 364-383.
    5. Chakuu, Sumeer & Masi, Donato & Godsell, Janet, 2019. "Exploring the relationship between mechanisms, actors and instruments in supply chain finance: A systematic literature review," International Journal of Production Economics, Elsevier, vol. 216(C), pages 35-53.
    6. Mou, W.M. & Wong, W.-K. & McAleer, M.J., 2018. "Financial Credit Risk and Core Enterprise Supply Chains," Econometric Institute Research Papers EI2018-27, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    7. Kangning Zheng & Zuopeng Zhang & Jeffrey Gauthier, 2022. "RETRACTED ARTICLE: Blockchain-based intelligent contract for factoring business in supply chains," Annals of Operations Research, Springer, vol. 308(1), pages 777-797, January.
    8. Dekkers, Rob & de Boer, Ronald & Gelsomino, Luca Mattia & de Goeij, Christiaan & Steeman, Michiel & Zhou, Qijun & Sinclair, Scott & Souter, Victoria, 2020. "Evaluating theoretical conceptualisations for supply chain and finance integration: A Scottish focus group," International Journal of Production Economics, Elsevier, vol. 220(C).
    9. Péter Juhász & Nóra Felföldi-Szűcs, 2022. "Financing Cooperative Supply Chain Members—The Bank’s Perspective," Risks, MDPI, vol. 10(7), pages 1-17, July.
    10. Scarpin, Marcia Regina Santiago & Scarpin, Jorge Eduardo & Krespi Musial, Nayane Thais & Nakamura, Wilson Toshiro, 2022. "The implications of COVID-19: Bullwhip and ripple effects in global supply chains," International Journal of Production Economics, Elsevier, vol. 251(C).
    11. You Zhu & Chi Xie & Bo Sun & Gang-Jin Wang & Xin-Guo Yan, 2016. "Predicting China’s SME Credit Risk in Supply Chain Financing by Logistic Regression, Artificial Neural Network and Hybrid Models," Sustainability, MDPI, vol. 8(5), pages 1-17, May.
    12. Beatrice Marchi & Simone Zanoni & Mohamad Y. Jaber, 2020. "Improving Supply Chain Profit through Reverse Factoring: A New Multi-Suppliers Single-Vendor Joint Economic Lot Size Model," IJFS, MDPI, vol. 8(2), pages 1-16, April.
    13. Zhang, Wen & Yan, Shaoshan & Li, Jian & Tian, Xin & Yoshida, Taketoshi, 2022. "Credit risk prediction of SMEs in supply chain finance by fusing demographic and behavioral data," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 158(C).
    14. Hisham Alidrisi, 2021. "Measuring the Environmental Maturity of the Supply Chain Finance: A Big Data-Based Multi-Criteria Perspective," Logistics, MDPI, vol. 5(2), pages 1-24, April.
    15. Anh Huu Nguyen & Thinh Gia Hoang & Vu Minh Ngo & Loan Quynh Thi Nguyen & Huan Huu Nguyen, 2023. "Sustainability-oriented supply chain finance in Vietnam: insights from multiple case studies," Operations Management Research, Springer, vol. 16(1), pages 259-279, March.
    16. Anna Trunk & Hendrik Birkel, 2022. "No Resilience Without Partners: A Case Study on German Small and Medium-Sized Enterprises in the Context of COVID-19," Schmalenbach Journal of Business Research, Springer, vol. 74(4), pages 537-574, December.
    17. Zhang, Tiantian & Zhang, Cherry Yi & Pei, Qifan, 2019. "Misconception of providing supply chain finance: Its stabilising role," International Journal of Production Economics, Elsevier, vol. 213(C), pages 175-184.
    18. WeiMing Mou & Wing-Keung Wong & Michael McAleer, 2018. "Financial Credit Risk Evaluation Based on Core Enterprise Supply Chains," Sustainability, MDPI, vol. 10(10), pages 1-17, October.
    19. Simona Burta & Ana-Cristina Nicolescu & Sorana Vãtavu & Emilia Bozga & Oana-Ramona Lobon?, 2022. "Modelling framework of the Tandem Supply Chain Efficiency and Sustainable Financial Performance in the Automotive Industry," Zbornik radova Ekonomskog fakulteta u Rijeci/Proceedings of Rijeka Faculty of Economics, University of Rijeka, Faculty of Economics and Business, vol. 40(1), pages 201-224.
    20. Pratibha Wasan & Ashwani Kumar & Sunil Luthra, 2023. "How can banks and finance companies incorporate value chain factors in their risk management strategy? The case of agro‐food firms," Business Strategy and the Environment, Wiley Blackwell, vol. 32(1), pages 858-877, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jmathe:v:10:y:2022:i:3:p:498-:d:741813. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.