Integrated DANP and binary goal programming model in generating joint-decision making for packaging postponement and supplier selection

This article explores the application of goal programming (GP) for improving tactical decision-making in supply chains. GP demonstrates flexibility to be integrated with other Multi-Criteria Decision Making (MCDM) methods such as Decision-Making Trial Evaluation and Laboratory (DEMATEL)-based Analytic Network Process (ANP) (DANP) to support better business decisions. Joint-decision making of packaging postponement and supplier selection involving two business functions: logistics and purchasing, effectively reduce the supply chain cost. This research proposes integrating the DANP and binary goal programming (BGP) model to generate optimal joint decision-making of packaging postponement and supplier selection. Based on a case of a shoe company in Indonesia, this research identifies the optimal trade-off between packaging and transportation costs. The findings show that the company needs to apply the packaging postponement to all distribution centres to minimize total cost. The sensitivity analysis illustrates that the decision remains until the packaging cost at the main factory is reduced by 50% or the packaging cost at the distribution centre (DC) is increased by 50%. The optimal solution shows the reduction of average logistics cost by 12.64%. This article provides a practical approach for managers to negotiate packaging prices with suppliers by considering transportation costs.