IDEAS home Printed from https://ideas.repec.org/a/hin/complx/8731027.html
   My bibliography  Save this article

Combined Use of Mathematical Optimization and Design of Experiments for the Maximization of Profit in a Four-Echelon Supply Chain

Author

Listed:
  • Daniel Arturo Olivares Vera
  • Elias Olivares-Benitez
  • Eleazar Puente Rivera
  • Mónica López-Campos
  • Pablo A. Miranda

Abstract

This paper develops a location-allocation model to optimize a four-echelon supply chain network, addressing manufacturing and distribution centers location, supplier selection and flow allocation for raw materials from suppliers to manufacturers, and finished products for end customers, while searching for system profit maximization. A fractional-factorial design of experiments is performed to analyze the effects of capacity, quality, delivery time, and interest rate on profit and system performance. The model is formulated as a mixed-integer linear programming problem and solved by using well-known commercial software. The usage of factorial experiments combined with mathematical optimization is a novel approach to address supply chain network design problems. The application of the proposed model to a case study shows that this combination of techniques yields satisfying results in terms of both its behavior and the obtained managerial insights. An ANOVA analysis is executed to quantify the effects of each factor and their interactions. In the analyzed case study, the transportation cost is the most relevant cost component, and the most relevant opportunity for profit improvement is found in the factor of quality. The proposed combination of methods can be adapted to different problems and industries.

Suggested Citation

  • Daniel Arturo Olivares Vera & Elias Olivares-Benitez & Eleazar Puente Rivera & Mónica López-Campos & Pablo A. Miranda, 2018. "Combined Use of Mathematical Optimization and Design of Experiments for the Maximization of Profit in a Four-Echelon Supply Chain," Complexity, Hindawi, vol. 2018, pages 1-25, April.
    • Handle: RePEc:hin:complx:8731027
    DOI: 10.1155/2018/8731027
    as

    Download full text from publisher

    File URL: http://downloads.hindawi.com/journals/8503/2018/8731027.pdf
    Download Restriction: no
    File URL: http://downloads.hindawi.com/journals/8503/2018/8731027.xml
    Download Restriction: no
    File URL: https://libkey.io/10.1155/2018/8731027?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Bushuev, Maxim A., 2018. "Delivery performance improvement in two-stage supply chain," International Journal of Production Economics, Elsevier, vol. 195(C), pages 66-73.
    2. Raa, Birger, 2015. "Fleet optimization for cyclic inventory routing problems," International Journal of Production Economics, Elsevier, vol. 160(C), pages 172-181.
    3. Zhang, Wei & (Ato) Xu, Wangtu, 2017. "Simulation-based robust optimization for the schedule of single-direction bus transit route: The design of experiment," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 106(C), pages 203-230.
    4. Hongtao Hu & Ye Zhang & Lu Zhen, 2017. "A two-stage decomposition method on fresh product distribution problem," International Journal of Production Research, Taylor & Francis Journals, vol. 55(16), pages 4729-4752, August.
    5. Hesham K. Alfares & Ahmed M. Attia, 2017. "A supply chain model with vendor-managed inventory, consignment, and quality inspection errors," International Journal of Production Research, Taylor & Francis Journals, vol. 55(19), pages 5706-5727, October.
    6. Ming-Hung Shu & Hsien-Chung Wu, 2014. "Supplier Evaluation and Selection Based on Stochastic Dominance: A Quality-Based Approach," Communications in Statistics - Theory and Methods, Taylor & Francis Journals, vol. 43(14), pages 2907-2922, July.
    7. Wang, Sujuan & Hu, Qiying & Liu, Weiqi, 2017. "Price and quality-based competition and channel structure with consumer loyalty," European Journal of Operational Research, Elsevier, vol. 262(2), pages 563-574.
    8. Yong-Wu Zhou & Bin Cao & Yuanguang Zhong & Yongzhong Wu, 2017. "Optimal advertising/ordering policy and finance mode selection for a capital-constrained retailer with stochastic demand," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 68(12), pages 1620-1632, December.
    9. Quigley, John & Walls, Lesley & Demirel, Güven & MacCarthy, Bart L. & Parsa, Mahdi, 2018. "Supplier quality improvement: The value of information under uncertainty," European Journal of Operational Research, Elsevier, vol. 264(3), pages 932-947.
    10. Franca, Rodrigo B. & Jones, Erick C. & Richards, Casey N. & Carlson, Jonathan P., 2010. "Multi-objective stochastic supply chain modeling to evaluate tradeoffs between profit and quality," International Journal of Production Economics, Elsevier, vol. 127(2), pages 292-299, October.
    11. Editors, 2014. "International Journal of Systems Science," International Journal of Systems Science, Taylor & Francis Journals, vol. 45(12), pages 1-1, December.
    12. Madadi, AliReza & Kurz, Mary E. & Mason, Scott J. & Taaffe, Kevin M., 2014. "Supply chain design under quality disruptions and tainted materials delivery," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 67(C), pages 105-123.
    13. Chen, Jingxian & Liang, Liang & Yao, Dong-Qing & Sun, Shengnan, 2017. "Price and quality decisions in dual-channel supply chains," European Journal of Operational Research, Elsevier, vol. 259(3), pages 935-948.
    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. Huang, Hongfu & He, Yong & Li, Dong & Li, Shanshan, 2023. "Competing multinationals’ backshoring decisions: Tax arbitrage versus production reliability tradeoff," European Journal of Operational Research, Elsevier, vol. 311(2), pages 515-532.
    2. Lin, Xiaogang & Zhou, Yong-Wu & Hou, Rui, 2021. "Impact of a “Buy-online-and-pickup-in-store” Channel on Price and Quality Decisions in a Supply Chain," European Journal of Operational Research, Elsevier, vol. 294(3), pages 922-935.
    3. Bin Cao & Qingyu Zhang & Mei Cao, 2022. "Optimizing Hybrid-Channel Supply Chains with Promotional Effort and Differential Product Quality: A Game-Theoretic Analysis," Mathematics, MDPI, vol. 10(11), pages 1-21, May.
    4. Zhang, Jianqiang & Cao, Qingning & He, Xiuli, 2019. "Contract and product quality in platform selling," European Journal of Operational Research, Elsevier, vol. 272(3), pages 928-944.
    5. Hu, Huaqing & Sun, Shuxiao & Zheng, Xiaona & Chen, Lihua & Huang, Tao, 2021. "Committed or contingent? The retailer’s information acquisition and sharing strategies when confronting manufacturer encroachment," International Journal of Production Economics, Elsevier, vol. 242(C).
    6. Jabarzare, Nahid & Rasti-Barzoki, Morteza, 2020. "A game theoretic approach for pricing and determining quality level through coordination contracts in a dual-channel supply chain including manufacturer and packaging company," International Journal of Production Economics, Elsevier, vol. 221(C).
    7. Zhang, Jianxiong & Li, Sa & Zhang, Shichen & Dai, Rui, 2019. "Manufacturer encroachment with quality decision under asymmetric demand information," European Journal of Operational Research, Elsevier, vol. 273(1), pages 217-236.
    8. Huang, Hongfu & Liu, Feng & Zhang, Peng, 2021. "To outsource or not to outsource? Warranty service provision strategies considering competition, costs and reliability," International Journal of Production Economics, Elsevier, vol. 242(C).
    9. Matsui, Kenji, 2020. "Optimal bargaining timing of a wholesale price for a manufacturer with a retailer in a dual-channel supply chain," European Journal of Operational Research, Elsevier, vol. 287(1), pages 225-236.
    10. Scott, James & Ho, William & Dey, Prasanta K. & Talluri, Srinivas, 2015. "A decision support system for supplier selection and order allocation in stochastic, multi-stakeholder and multi-criteria environments," International Journal of Production Economics, Elsevier, vol. 166(C), pages 226-237.
    11. Fan, Jianchang & Ni, Debing & Fang, Xiang, 2020. "Liability cost sharing, product quality choice, and coordination in two-echelon supply chains," European Journal of Operational Research, Elsevier, vol. 284(2), pages 514-537.
    12. Zhinan Li & Qinming Liu & Chunming Ye & Ming Dong & Yihan Zheng, 2022. "Achieving Resilience: Resilient Price and Quality Strategies of Fresh Food Dual-Channel Supply Chain Considering the Disruption," Sustainability, MDPI, vol. 14(11), pages 1-24, May.
    13. Hasani, Aliakbar & Khosrojerdi, Amirhossein, 2016. "Robust global supply chain network design under disruption and uncertainty considering resilience strategies: A parallel memetic algorithm for a real-life case study," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 87(C), pages 20-52.
    14. Moina Ajmeri & Ahmad Ali, 2017. "Analytical design of modified Smith predictor for unstable second-order processes with time delay," International Journal of Systems Science, Taylor & Francis Journals, vol. 48(8), pages 1671-1681, June.
    15. Viet, Nguyen Quoc & Behdani, Behzad & Bloemhof, Jacqueline, 2018. "Value of Information to Improve Daily Operations in High-Density Logistics," International Journal on Food System Dynamics, International Center for Management, Communication, and Research, vol. 9(1), January.
    16. Wang, Chengfu & Chen, Xiangfeng & Xu, Xun & Jin, Wei, 2023. "Financing and operating strategies for blockchain technology-driven accounts receivable chains," European Journal of Operational Research, Elsevier, vol. 304(3), pages 1279-1295.
    17. Qiu, Ruozhen & Sun, Minghe & Lim, Yun Fong, 2017. "Optimizing (s, S) policies for multi-period inventory models with demand distribution uncertainty: Robust dynamic programing approaches," European Journal of Operational Research, Elsevier, vol. 261(3), pages 880-892.
    18. P.R. Ouyang & V. Pano & T. Dam, 2015. "PID position domain control for contour tracking," International Journal of Systems Science, Taylor & Francis Journals, vol. 46(1), pages 111-124, January.
    19. M. Kang & J. Cheong & H.M. Do & Y. Son & S.-I. Niculescu, 2017. "A practical iterative PID tuning method for mechanical systems using parameter chart," International Journal of Systems Science, Taylor & Francis Journals, vol. 48(13), pages 2887-2900, October.
    20. Md. Majharul Haque & Suraiya Pervin & Anowar Hossain & Zerina Begum, 2020. "Approaches and Trends of Automatic Bangla Text Summarization: Challenges and Opportunities," International Journal of Technology Diffusion (IJTD), IGI Global, vol. 11(4), pages 67-83, October.

    More about this item

    Statistics

    Access and download statistics

    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:hin:complx:8731027. 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: Mohamed Abdelhakeem (email available below). General contact details of provider: https://www.hindawi.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.