A three-objective optimization model for mid-term sustainable supply chain network design

Abstract

Supply chain network design (SCND) is a pillar of supply chain management (SCM). The modern industrial and market context, characterized by instability and dynamism, asks the supply chains and logistic networks to be designed from an integrated and reactive perspective, addressing multiple goals. Economic and environmental sustainability is the most explored target by the literature. Besides this goal, the recent mass customization paradigm, led by Industry 4.0, resulted in a significant growth of product variants, which cannot be managed by traditional production strategies, as Make-to-Stock (MTS), because of the high rising costs. Hence, stock minimization, which is one of the main pillars of the lean production philosophy, is a key competitive asset to consider in SCND. However, the current literature still lacks of integrated three-objective models simultaneously optimizing stock, economic and environmental issues in designing and managing modern supply chain networks. To fill this gap, this paper proposes and applies a mid-term three-objective linear programming optimization model to minimize, simultaneously, the stock level (lean waste), the environmental emissions (green waste), and the global supply chain network costs, getting the Pareto frontier and supporting the industrial practitioners and the logistic managers in the network design and management. A European instance exemplifies the model application getting stock, environmental and economic optima together with reasonable best-balance configurations. Among the Pareto points, the selected configuration allows reducing the stock level without a relevant increase of the environmental emissions (+1.62%) and of the supply chain network costs (+0.21%), respect to their single-objective optima.