A Mathematical Programming Approach to Supply Chain Network Design considering Shareholder Value Creation

Abstract

One of the main goals of supply chain management is to ensure proper flows of products and information through all nodes to supply them in the right place at the right time. To achieve this objective, it is very important to consider flows of products and finances among supply chain nodes. Traditionally, operational and financial processes have been optimized as separate problems. The developed model addresses the problem of designing a supply chain network and tries to integrate both areas of operations and financial aspects to maximize the value created and measured by the Shareholder Value Analysis (SVA). The results show that with appropriate financial decisions, creating more value for the company and its shareholders is achievable. The developed model with a new financial approach is able to improve the total created shareholder value as much as 0.7% larger than the SVA obtained without financial aspects and 0.93% larger than the value created by the basic model. The main reason for an increase in value creation is due to new operational and financial aspects, which mainly show the possibility of closing facilities and bank debt repayments. To validate and show the applicability of the proposed model, it was solved by GAMS-BARON solver with data provided from the literature. Sensitivity analyses on financial parameters were performed to evaluate the results.