Integrated decisions for global supply chain network configuration: a dynamic multi-modal perspective

Abstract

ABSTRACT This paper proposes a mathematical model to optimally design a multi-modal global production and logistics network consisting of multiple plants, warehouses, and marketplaces. The proposed model is a mixed integer linear program (MILP), which optimally selects different facilities and warehouses required to be active in each time period to fulfil the demand of various marketplaces. The objective function is cost minimization pertaining to setup, production, inventory holding, and transportation. Along with this, the model also decides the optimal quantities to be transported among the plants, warehouses, and marketplaces. The model also optimally selects the transportation mode to be deployed. The paper then expands the proposed model to include a time-cost trade off by imposing a penalty cost for delays and compares and critiques the results of the two scenarios. The proposed MILP has been validated on a randomly generated data set consisting of 4 plants, 6 warehouses, 4 marketplaces, and 3 time periods (4P-6W-4 M-3T) using LINGO 10 optimization package. The illustration considers three modes of transportation namely, road, rail, and air. Last, the paper concludes with discussing managerial implications of the work along with suggesting some research directions for future.