Supply chain design with time-limited transportation contracts

Abstract

Market globalization and increased costs have tightened profit margins within the chemical process industry. A supply chain design dictates the supply chain network structure and plays a vital role in determining the profitability of a process manufacturing enterprise. This work considers the design of supply chains, with a particular focus on capturing the effects of time-limited transportation contracts in which specified minimum durations of transportation linkages must be adhered to. An optimization-based design formulation is proposed, with flexibility in allowable node connections and direction of material flow. The design problem is formulated as a MILP. The proposed approach is applied to an industrially based case study, and the economic impact of taking time-limited contractual constraints into account, where these exist, is demonstrated.