An Integrated Approach for Sustainable Supply Chain Management with Replenishment, Transportation, and Production Decisions

Abstract

Sustainable supply chain management is important for most firms in today’s competitive environment. This study considers a supply chain environment under which the firm needs to make decisions regarding from which supplier and what quantity of parts should be purchased, which vehicle with a certain emissions amount and transportation capacity should be assigned, and what kind of production mode should be used. The integrated replenishment, transportation, and production problem is concerned with coordinating replenishment, transportation, and production operations to meet customer demand with the objective of minimizing the cost. The problem considered in this study involves heterogeneous vehicles with different emission costs, various materials with dissimilar emission costs, and distinct production modes, each with their own emission costs. In addition, multiple suppliers with different quantity discount schemes are considered, different kinds of vehicles with different loading capacities and traveling distance limits are present, and different production modes with different production capacities and production costs are included. A mixed integer programming model is proposed first to minimize the total cost, which includes the ordering cost, purchase cost, transportation cost, emission cost, production cost, inventory-holding cost, and backlogging cost, while satisfying various constraints in replenishment, transportation, and production. A particle swarm optimization model is constructed next to deal with large-scale problems that are too complicated to solve by the mixed integer programming. The main advantage of the proposed models lies in their ability to simultaneously coordinate the replenishment, transportation, and production operations in a planning horizon. The proposed particle swarm optimization model could further identify a near-optimal solution to the complex problem in a very short computational time. To the best of the authors’ knowledge, this is the first paper that considers the sustainable supply chain management problem with multiple suppliers, multiple vehicles, and multiple production modes simultaneously. Case studies are presented to examine the practicality of the mixed integer programming and the particle swarm optimization models. The proposed models can be adopted by the management to make relevant supply chain management decisions.