Supply chain and optimization

1. Planning and Optimisation
of a
Complex Multinational Supply Chain
– A Real-life Case Study
Mr. Masoud Esmaeili RMIT University
Dr. Behnam Fahimnia UniSA, School of Management

2. 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.

3. Research Problem
Suppliers
Material Costs
Plan Source Make Deliver Buy
Warehouses
Transportation
Costs
Inventory Costs
End-users
Transportation
Costs
Manufacturers
Transportation
Costs
Manufacturing
Costs

4. Local
Suppliers
Foreign
Suppliers
Local Manufacturers
Foreign Manufacturers
Local and Foreign DCs
Local and Foreign
Markets
Research Problem…

5. * Multiple warehouses
* Multiple markets
* Multiple transport routs
* Economies of scale in
transport
* Exchange rates and tariff
costs
Research Problem…
* Multiple product types * Multiple raw material types
* Multiple raw material suppliers * Multiple manufacturers
* Exchange rates and tariff costs * Economies of scale in procurement and transport

6. 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
Qipt
Vrspt
Wiplt
Xilet
Yrpt
Zilt

7. Memetic Algorithm optimisation

8. 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

9. 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
Research direction
Triggers for ESSCM:

10. 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
Call for collaborators

11. “Thanks for your attention”