Design and Optimization of Capacitated Supply Chain Networks Including Quality Measures

This paper presents (1) a novel capacitated model for supply chain network design which considers manufacturing, distribution, and quality costs (named SCND-COQ model) and (2) five combinatorial optimization methods, based on nonlinear optimization, heuristic, and metaheuristic approaches, which are used to solve realistic instances of practical size. The SCND-COQ model is a mixed-integer nonlinear problem which can be used at a strategic planning level to design a supply chain network that maximizes the total profit subject to meeting an overall quality level of the final product at minimum costs. The SCND-COQ model computes the quality-related costs for the whole supply chain network considering the interdependencies among business entities. The effectiveness of the proposed solution approaches is shown using numerical experiments. These methods allow solving more realistic (capacitated) supply chain network design problems including quality-related costs (inspections, rework, opportunity costs, and others) within a reasonable computational time.