An Integrated Optimization Model of Green Supply Chain Network Design with Inventory Management

Abstract

Supply chain network design and inventory management are both significant for improving the core competitiveness of enterprises. This study investigates the joint optimization problem of facility locations and inventory for assembly manufacturing enterprises’ multi-echelon supply chain networks, considering the locations of facilities, the selection of suppliers, transport mode choices, and inventory decisions simultaneously. A corresponding integrated optimization model is proposed, which aims to minimize the total cost, consisting of the fixed open cost of facilities, the inventory cost of the open plants and distribution centers, and the transportation cost of vehicles in the entire supply chain network as well as the cost of CO2 emissions. Based on the characteristics of the proposed optimization model, a hybrid genetic algorithm embedded with a local search is developed to solve the proposed model. Numerical examples and a case study are provided to illustrate the effectiveness of the proposed model and the corresponding algorithm. The findings show that the model is reasonable and applicable, and hybrid genetic algorithm (HGA) is more efficient than the standard genetic algorithm (SGA). In addition, plants’ maximum lead-time has a significant impact on the total cost of the supply chain.