Robust facility location decisions for resilient sustainable supply chain performance in the face of disruptions

Abstract

PurposeFacility location and re-location decisions are critical managerial decisions in modern supply chains. Such decisions are difficult in this environment as managers encounter uncertainty and risks. The study investigates establishing or moving distribution facilities in the global supply chain by considering costs, fulfilment, trade uncertainties, risks under environmental trade-offs and disruptive technologies.Design/methodology/approachThis paper combines the possibilities and probabilistic scenarios for a supply chain network by proposing the novel Robust Optimisation and Mixed Integer Linear Programming (ROMILP) method developed under the potential uncertainty of demand while considering the costs associated with a four-tier supply chain network. ROMILP has been solved in a real-time logistics environment by applying a case study approach.FindingsThe solution is obtained using an exact solution approach and provides optimality in all tested market scenarios along the proposed global logistics corridor. A sensitivity analysis examines potential facility location scenarios in a global supply chain context.Research limitations/implicationsLogistics managers can apply the ROMILP model to test the cost-benefit trade-offs against their facility location and relocation decisions while operating under uncertainty. Future research is proposed to extend the literature by applying data from the OBOR logistics corridor.Originality/valueThis study is the first to examine sustainable dimensions along the global logistics corridor and investigate the global container traffic perspective. The study also adds value to the Middle East logistics corridor regarding facility location decisions.