A multi-objective optimization model for designing resilient supply chain networks

Abstract

Supply chains evolve over time: they expand via planned construction and/or corporate mergers and acquisitions, and contract due to required facility closures, partnership terminations, and/or other cost-cutting decisions. In addition, businesses also operate in an uncertain world wherein network and other design decisions must be made despite the reality of unforeseen future events that can and often do disrupt or damage corporate supply chains. We present a multi-objective network design model and accompanying optimization-based decision support methodology for supply chain architects. Our methodology helps to evaluate the trade-off between total network cost minimization and maximizing overall supply chain network connectivity. Decision makers can evaluate a collection of solutions with different cost and connectivity values using our methodology and choose the network configuration that best serves the needs of their organization. Though our multi-objective network design model is applicable for individual companies looking to expand or contract their internal supply chains, we demonstrate our model's efficacy through the lens of a practically-motivated corporate merger and acquisition activity.