A strategic model for supply chain design with logical constraints: formulation and solution

Authors:
Hong Yan;Zhenxin Yu;T. C. Edwin Cheng
Affiliations:
Department of Management, The Hong Kong Polytechnic University, Kowloon, Hong Kong;Department of Management, The Hong Kong Polytechnic University, Kowloon, Hong Kong;Department of Management, The Hong Kong Polytechnic University, Kowloon, Hong Kong
Venue:
Computers and Operations Research
Year:
2003

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Abstract

This paper proposes a strategic production-distribution model for supply chain design with consideration of bills of materials (BOM). Logical constraints are used to represent BOM and the associated relationships among the main entities of a supply chain such as suppliers, producers, and distribution centers. We show how these relationships are formulated as logical constraints in a mixed integer programming (MIP) model, thus capturing the role of BOM in the selection of suppliers in the strategic design of a supply chain. A test problem is presented to illustrate the effectiveness of the formulation and solution strategy. The results and their managerial implications are discussed.