Planning and Optimisation
of a
Complex Multinational Supply Chain
– A Real-life Case Study
Mr. Masoud Esmaeili
Dr. Behnam Fahimnia
RMIT University
UniSA, School of Management
Research Motivation
This research was motivated by a supply chain planning
problem faced by a multinational manufacturing/distribution
company that produces and distributes metal vehicle parts.
This research is a part of a PhD research which is half way
through, expected to be completed in mid 2012.
Research Problem
Plan
Source
Suppliers
Material Costs
Make
Manufacturers
Transportation
Costs
Deliver
Warehouses
Buy
End-users
Transportation
Transportation
Costs
Costs
Manufacturing
Inventory Costs
Costs
Research Problem…
Local Suppliers
Local Manufacturers
Local and Foreign DCs
Foreign Manufacturers
Foreign Suppliers
Local and Foreign
Markets
Research Problem…
* Multiple product types
* Multiple raw material suppliers
* Exchange rates and tariff costs
* Multiple warehouses
* Multiple markets
* Multiple transport routs
* Economies of scale in
transport
* Exchange rates and tariff
costs
* Multiple raw material types
* Multiple manufacturers
* Economies of scale in procurement and transport
Mathematical modelling
Mixed-Integer Linear Formulation
The objective function minimises the sum of:
• Cost of raw material procurement
• Production costs in local and foreign plants
• Transportation and storage costs
• Tariff costs
Major model constraints:
• Procurement and production constraints
• Storage and transportation constraints
• Economies of scale in procurement and transport
Decision variables
Q ipt
Vrspt
Wiplt
Xilet
Yrpt
Zilt
Memetic Algorithm optimisation
Research direction
Environmentally Sustainable Supply Chain Management (ESSCM)
• Long term success of SC executives must be built not only on
profitability but also on their contribution to the future of
people and our planet.
• A ESSC model is a SC with improvement of the environmental
impacts explicitly considered.
Research direction
Triggers for ESSCM:
Pressures (government legislation):
• SC executives are under pressure from their regulators, major investors,
banks, and insurers to consider sustainability criteria for running
greener operations.
• More supplier standard indices are tracking the sustainability
performance of companies (e.g. Australian SAM Sustainability Index and
Dow Jones Sustainability Index).
Incentives:
• Governments encouraging voluntary environmental initiatives
• Customers purchase their products with sustainability in mind
• University graduates are seeking more sustainable companies
Call for collaborators
Collaborators are invited to join our multidisciplinary
multinational research teams
Working areas in the context of ESSCM:
• Quantifying environmental performance indicators
• Mathematical modelling with respect to the identified
performance measures
• Development of solution approaches for solving the proposed
MILP and MINLP models
• Computer programming and coding of the algorithms
• Performance analysis and evaluation of the numerical results
“Thanks for your attention”
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Planning and optimization of a complex multinational supply chain