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Supply chain network downsizing with product line pruning using a new demand substitution

Author

Listed:
  • Jalal Ashayeri

    (Tilburg University, The Netherlands)

  • Ning Ma

    (Tilburg University, The Netherlands)

  • Renata Sotirov

    (Tilburg University, The Netherlands)

Abstract

This paper presents an optimization model for downsizing a multi-product supply chain facing bankruptcy risk, where multi-functional production facilities are shared for producing a group of substitutable products. In order to determine the potential demand after discontinuation of certain product types, the proposed mixed integer programming model incorporates a new general formulation of demand substitution, which allows arbitrary demand diversion and arbitrary replacement rates between products under investigation. The new substitution formulation enables considering uneven substitutions for supply chain network design and therefore it extends currently used substitution approaches. A series of systematically generated downsizing cases confirm the validity of the here proposed approach, and illustrate how downsized chains can successfully adopt to the new circumstances.

Suggested Citation

  • Jalal Ashayeri & Ning Ma & Renata Sotirov, 2015. "Supply chain network downsizing with product line pruning using a new demand substitution," Journal of the Operational Research Society, Palgrave Macmillan;The OR Society, vol. 66(10), pages 1699-1716, October.
    • Handle: RePEc:pal:jorsoc:v:66:y:2015:i:10:p:1699-1716
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    Cited by:

    1. Zhu, Qingyun & Shah, Purvi & Sarkis, Joseph, 2018. "Addition by subtraction: Integrating product deletion with lean and sustainable supply chain management," International Journal of Production Economics, Elsevier, vol. 205(C), pages 201-214.
    2. Jahani, Hamed & Abbasi, Babak & Sheu, Jiuh-Biing & Klibi, Walid, 2024. "Supply chain network design with financial considerations: A comprehensive review," European Journal of Operational Research, Elsevier, vol. 312(3), pages 799-839.

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