Maximising net present EVA for the design of a supply chain network using a hybrid analytical-simulation algorithm

Abstract

This study applies a hybrid analytical-simulation algorithm to obtain the optimal design of the supply chain network under realistic operating conditions subject to uncertainties. The objective of this study is to maximise the net present economic value added (EVA) of the whole supply chain network where the value creation of a business is to be measured under the time value of money. Since an analytical model may have some limitations, the simulation model is used to simulate and exchange the outputs between the models for better value creation in the network system under uncertainties. The result suggests that by applying such a hybrid analytical-simulation algorithm to the problem, the obtained result shows a significant improvement of the net present EVA while using a shorter solving time with a faster convergence rate in achieving the optimal value, as compared to the result suggested by the traditional simulation-based optimisation model.