Simple heuristic for the strategic supply chain design of large-scale networks: A Brazilian case study

Abstract

We propose a simple heuristic method for the strategic Supply Chain Network Design (SCND) problem of a Brazilian tire company with four layers, multi-product in a single-period. Although several solution methods have been developed to solve this problem, mainly based on heuristic techniques, they have serious limitations in the number of warehouses, products, and consumer zones they can handle. This issue restrains their practical applications to the specific addressed real-world problem, involving hundreds of elements in these dimensions. The heuristic approach, combining a multi-start mechanism and a rounding strategy, is specially developed to solve large-scale problems in reasonable time. The rounding strategy solves the models proposed by the multi-start mechanism. This integration allows the required diversification in the solution search, avoiding stagnation in a local optimum. The heuristic method is first evaluated using randomly generated instances, with different sizes in terms of the number of suppliers, factories, warehouses, products, and customer zones. The obtained results show the solution method is competitive, compared with previous developed approaches, with the advantage of solving larger instances efficiently and effectively. The heuristic is then applied to the company, aiming to restructure its supply chain due to the overture of a new factory. The proposed heuristic approach proves appropriate to solve this practical application, involving an unprecedented number of warehouses, products, and customers.