An Optimization Model for Multi-Echelon Multi-Commodity Supply Chain Design with Side Constraints

Abstract

Abstract A proper strategies in designing and optimizing supply chains can help enterprises to stay competitive in this volatile economy. Identifying various type of products that run through the supply chain and aligning several parts of the supply chain to these product types are considered to be effective strategies adapted by successful companies. In this paper we address an optimal design of a multi-echelon supply chain problem with various commodity that is of significance to the business enterprise, along with the associated inventory systems. By using the guaranteed service approach to model the multi-echelon inventory system, we develop an MINLP model to simultaneously optimize the transportation, inventory and network structure of a multi-echelon supply chain which involve multi commodity. The optimization model is then solved using a strategy of releasing nonbasic variables from their bounds, combined with the “active constraint” method.