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Uncertain Supply Chain Management 1 (2013) 1–24Contents lists available at GrowingScienceUncertain Supply Chain Managementhomepage: www.GrowingScience.com/uscmSupply chain network optimization: A review of classification, models, solution techniques andfuture researchNiki Matinrada*, Emad Roghaniana and Zarifeh RasibaDepartment of Industrial Engineering, Khaje Nasir University of Technology, Tehran, IranDepartment of Industrial Engineering, Alzahra University, Tehran, IranbCHRONICLEArticle history:Received January 19, 2013Received in revised format18 April 2013Accepted May 8 2013Available onlineMay 9 2013Keywords:Supply chainNetworkOptimizationSurveyABSTRACTWith an ongoing progress in industries and technologies, most firms and businesses highlydepend on cooperation and collaborations within a supply chain. In today’s competitivebusiness environment, customer satisfaction plays an important role for the business survival.These matters can be secured by “supply chain”, a chain consists of various companies workingtogether to maintain customers’ satisfaction. If various stages of different chains cooperate witheach other, “supply chain network” (SCN) will be the outcome. In order to have a supply chainnetwork or just a supply chain-operation in its best possible way, some optimization techniquesare needed. In this paper, we present a close look at previous studies in the field of SCNoptimization techniques and classify them based on the relative important characteristics. 2013 Growing Science Ltd. All rights reserved.1. Introduction1.1. Supply chain managementNowadays management of supply chain plays an essential role on companies’ success and customers’satisfaction (Shukla et al., 2010; Chopra & Meindl, 2001). Supply chain management (SCM) alsoplays an important role in societies; SCM knowledge and capabilities can be applied to supportmedical missions, conduct disaster relief operations, and handle other kinds of emergencies. SCMalso plays an important role in cultural evolution and helps improve our quality of life. Due to therapid advancement of technology such as internet networks, connective product marking technologieslike RFID and emerging standards for their use defining specific locations based on Global LocationNumber(s), basic supply chain are rapidly evolving to Supply Chain Network. Supply chains andsupply chain networks both have similar characteristics. A system developed to move goods fromsupplier(s) to customer(s) like a flow, and movement of materials as well as information by linkingorganizations together to serve the end customer. “Network” depicts a more complex structure, where* Corresponding author. 98 912 435 6607E-mail addresses: nmatinrad@gmail.com (N. Matinrad) 2013 Growing Science Ltd. All rights reserved.doi: 10.5267/j.uscm.2013.05.003
2organizations can be cross-linked and there are two-way exchanges between where “chain” explains asimpler, sequential set of links (Harland et al., 2001). In both fields, supply chain (SC) and supplychain network (SCN), optimization is one of main working areas under-study system, which is ofhigh importance. The reason for this importance is because in every chain or network of supply welook for right application of tools and processes to make sure that all operations are executed,properly. In addition, it should be noted that right design of a supply chain (SCD) or supply chainnetwork (SCND) can be considered as an optimization problem, since in this case the right SCD orSCND looks forward to enhancing profitability or shareholders’ value.1.2. OriginationSupply chain network (SCN) is one of the important topics in an ongoing world because of increasingtrend on technological change and globalization of trade. It is also because of tending to accessexternal sources and developing economy based on knowledge and technology and the necessity ofcreating links and networks of strategic and focusing on quality, benefits and customer satisfactionand changeable and competitive world. While surveying different papers in the field of supply chainnetwork optimization (SCNO) and supply chain network design (SCND) in the time spectrum of2000-2013, importance of SCNO in every industry or business as well as absence of a new andholistic review paper in these fields were the main motivations for writing this paper. In addition, acapable industrial engineer involved in the field of SCNO and SCND should know about theirevolutions and different aspects of them to become a reliable engineer and manager in thecompetitive future world.1.3. Users and StakeholdersThe comprehensive vision of this paper can assist researchers and scholars who inquire about thissubject, and managers to have a glimpse to supply chain network and they can access any informationabout it and its resources easily and straightly. If a manager wants to know recent progress in SCNOand new modeling and their solution techniques to use them in his/her work, he/she can access thisinformation through this review paper.1.4. Contribution of paperWithin all papers dedicated to the subject of SCNO or SCND, various issues have been studied. Someof these papers consider only one matter at a time, while some others may try to take differentproblems into account at once. One point about these papers is the fact that they are not necessarily ina specific industry, which shows that SCNO or SCND have been applied in different industrialcontexts. This paper will try to contribute to the SCNO and SCND literature as follow: Considering studies within different industrial context,Categorizing different issues that have been studied within the area,Presenting existing gaps in the available studies in the literature.As pointed out once before, apart from the above mentioned contributions, main distinguishableaspect of our paper is its holistic view of the field. By this, we mean that this review starts fromdefinition and categorization of SC decision levels to the extent that presents characteristics ofstudied papers’ models.1.5. Organization of paperIn this study, first we will describe research method and scope of the paper in section 2. Then insection 3, terminology of this study will be illustrated. Section 4 will be devoted to studying supply
3N. Matinrad et al. / Uncertain Supply Chain Management 1 (2013)chain network design and optimization. In this section, we first explicate decision levels of supplychain and then categorize the problems in this area based on those levels, and finally in this sectionvarious kinds of models used in the studied papers within the time span will be categorized andexplained. Finally, in the section 5, we discuss about current gaps and trends in this area, and throughthese suggest subjects for future researchers.2. Research methods and scopeIn this section, we attempt to highlight the scope and research method of this review. With respect tothe SC matrix originally created by Stadtler and Kilger (2008), we highlight the scope of our paper inTable 1. Since our main focus in this research is on SCNO, every field covered by the papers we havestudied from the literature is shadowed in the Table 1. For instance, SCND as will be explained laterin section 4, is in the strategic or long-term level of planning and decision making. In order to studyliterature in a better and more practical manner, we chose a rather long period of time (papers of years2000 to 2013). We intend to identify gaps and trends in our chosen field and period of time as aconclusion of this research; therefore, a complete data collection will be required.Table 1Scope of the paper with respect to SC matrix (Stadtler and Kilger, 2008)SupplyLong-termPlanning ProcessProductionDistributionStrategic Network PlanningMasterProductionDistribution dPlanningDemandFulfillmentIn order to maintain necessary resources to conduct this survey, we used two main search engines: SCOPUS, andGoogle Scholar (Scholar.google.com)As it is known, SCOPUS is the largest available and reliable database. Although it should be notedthat Google Scholar is more up-to-date, and therefore, was used for complementary purposes. Wehave used different combination of keywords for having a comprehensive search, which has beendone on SCOPUS. These combinations are as follow: “Supply chain” and “Network design”, “Supplychain” and “optimization”, and “supply chain network” and “optimization”. In addition, “supplychain network design” and “supply chain network optimization” were used to make sure that everyrelated paper in these fields was found through our search. By using these keywords, a fair number ofpapers came up, among which at primary screening 231 of those seemed good enough for our review.But due to lack of access to some of journals, and focusing our interest in peer-reviewed researchpublications, a great deal of papers were omitted (about 156 papers). Through more accurate anddetailed study and investigation of the remaining papers, 51 of them were evaluated relevant to ourpaper’s scope and therefore, chosen useful and good for this review. In case some concepts wereneeded to be explained, some other references were also used.3. Terminology and definitionsThere are a few terms that are important in the studied area from conceptual and understandable pointof view, which are: Supply chain
4 Supply chain managementSupply chain networkOptimization and DesignSupply chain network optimization and designBefore proceeding more with our review, first these main concepts both in the field and our workwill be defined.3.1. Supply chainSupply chain is a network of four entities: suppliers, distribution networks, manufacturers, andcustomers; they have different types of connections and influences on each other includingtransportation, information sharing, and financial flows (Shukla et al., 2010; Chopra & Meindl, 2001;Ding et al., 2009; Beamon, 1998). These connections between different parts of the SC can be a twosided one depending on the connections’ type. In addition, these entities seek a unified goal, which isto maximize the overall generated value of the overall chain and their individual unit. Althoughachieving this goal may not be an easy task to do if the SC is not integrated and different elements’interests contrast with each other (Mo et al., 2005). Supply chain managers must consider all theinteractions and limitations between these elements and also consider operating factors, constraintsand the dynamics in the market, such as changes in demand (Perea-Lopez et al., 2003; Ding et al.,2009). In Fig.1 a general supply chain network that includes three various levels of enterprises:retailers, distribution centers and plants can be seen (Chen and Lee, 2004).Fig 1. General supply chain network (Chen et al., 2003)Attention to supply chain integration is increasing as a result of globalization and increasingcompetition (Wee & Yang, 2004). Competitiveness in a SC can be achieved through high speed ofinformation and material flow with low overhead costs. For success of a SC, managers must considercoordination and collaboration between different activities that exists in it (Shukla et al., 2010) andthe entire SC’s competitiveness on the market (Ambrosino & Scutellá, 2005).3.2. Supply chain managementAs a result of competitiveness in business environment and progresses in technology, an importanttask that companies must do to survive in this environment is working with other companies throughcommunication and specialization. These collaborations and co-operations create a chain ofcompanies and business entities with same goals, which will lead to a new concept in the
N. Matinrad et al. / Uncertain Supply Chain Management 1 (2013)5management area, supply chain management concept (Chen & Lee, 2004; Chen et al., 2007; Ding etal., 2009). In addition, with creation of these SCs, the competition in business world will be betweenSCs (Christopher, 1992). ‘‘Supply chain management’’ was first presented by Houlihan in 1985(Wang, 2009). Logistics management is one of the crucial factors in supply chain performance (Chan& Chung, 2004b). SCM is the active management of planning, designing, implementing andmonitoring and controlling the operations of the supply chain activities with the objective ofmaximizing total profitability which spans all motion and storage of raw materials, work-in-processinventory, and finished goods from a source to a customer (Melo et al., 2009).In SCM, optimization of multi criterion problems such as total costs, customer service level,inventory level, manufacturing lead times, and etc. may usually be encountered by decision makers(DM), which may be limited with some constraints, and affect each other in nature (Chan & Chung,2007). An individual member of organization should not only optimize itself, but also collaborationswith other partners for larger optimization planning can improve the individual and globalperformance (Silva et al., 2009).3.3. Supply chain networkSupply chain is not just a group of stages involved to satisfy a customer request, but rather a networkof interrelated stages involved to do customer requests. We want to manage this network’s flow andalso find the best network structure or supply chain design to maximize the beneficially (Geunes &Pardalos, 2003). A large numbers of manufacturing models have been proposed for the design andplanning supply chain network (Mo et al., 2005). The selection of partners in the supply chainnetwork management is important because SCN really needs the inter cooperation of the partners atthe upstream, midstream and downstream echelons along the supply chain (Wang, 2009).3.4. Optimization and designBased on merriam-webster.com optimization is defined as “an act, process, or methodology ofmaking something (as a design, system, or decision) as fully perfect, functional, or effective aspossible; specifically: the mathematical procedures (as finding the maximum of a function) involvedin this”. In management science, mathematical design is the selection of a best element from some setof available alternatives with regard to some criteria. In engineering The American HeritageDictionary defines design as: “To conceive or fashion in the mind; invent,” and “To formulate aplan”.3.5. Supply chain network optimization and designIn designing any supply chain, we should be very precise about the decisions concerned with thedefinition of the number, size, and location of the supply chain nodes (Canel & Khumawala, 2001;Teo & Shu, 2004; Simchi-Levi et al,. 2005; Zhang et al., 2008), the amount and location ofproduction facilities, the capacity at each facility, the assignment of each market region to one ormore locations, and supplier selection for sub-assemblies, components and materials (Meixell &Gargeya, 2005; Paksoy et al., 2010). Supply chain network design is an assessment to have greatimportance for enterprises to gain cost-effectiveness and competitiveness (Ballou, 2005) and to havean important impact in logistics costs (Chopra & Meindl, 2004; Cardona-Valdés et al., 2011).The questions connected with optimizing a SCN are linked to procurement, production, distribution,transportation, and suppliers’ selection, etc. (Paksoy et al., 2012a). Supplied materials’ quality levelsare directly affected the agreements with suppliers and influences the material flow through SCN,indirectly. Optimizations of distribution networks have been studied by many researchers who used
6linear programming, mixed integer programming, fractional programming, and multi objective linearfractional programming to solve problems, which can generate optimal solutions which are usuallytime consuming in computation, and complicated in model construction (Abdinnour-Helm S, 1999;Chan & Chung, 2004). In addition, we sometimes use nonlinear programming because of nonlinearsituations like the delivery cost changes as a function of delivery quantity which makes the modelingmore complex.4. Supply chain network optimization and designAs discussed earlier, decisions regarding SCN optimization and design are highly concerned withevery single part of a chain such as production facilities, distributer centers, suppliers and customersand every type of flow and connection between these nodes of the network. One of importantmethods for studying existing issues or potential ones in a field is using modeling techniques, andthen solving the modeled issue by the appropriate technique. Sometimes existing techniques will notbe capable of solving the presented model; therefore, modeler(s) should create a novel approachcapable of handling solving phase. In addition, in some cases solving can be done through solversoftware.In this section, we intend to cover different angles of issues studied in the literature regarding SCNDand SCNO. First, we will discuss decision levels concerned with supply chains. Then, acategorization based on specifications of papers’ models will be presented, and later, studied modelsin the literature from their objective functions and constraints perspective will be studied.4.1. Supply chain decision levelsIn order to ensure success of a supply chain management, right decisions about every aspect of asupply chain or supply chain network should be made (Chopra et al. 2004). These decisions can becategorized into three main classes based on the time horizon it is made for: Strategic; in this level, decision maker/makers consider long-term decisions and objectives.As it can be concluded, effects of these decisions are also long term. These decisions areconsidered in high level. Examples of this category include facilities location, supplierselection, partner selection, supply chain design, integration of supply chain, etc.Tactical; midterm decisions concerning issues such as transportation planning, distributionplanning, production planning and etc. are considered in this type of decision making.Operational; in this category short term decisions (and also low level decisions) which areconcern with daily managerial matters are made, among which we can name inventoryplanning, demand planning and forecasting and etc.The point that we should pay attention to about these levels of decision making is the fact that lowerlevel decisions are made within the framework and context of the higher level decisions. This meansthat operational decisions are made within the context made by strategic and tactical decisions. Itshould be mentioned that some decisions can be considered within two levels, like issue of VehicleRouting Problem (VRP) which is in a level between tactical and operational decisions. In Table 2 wepresent a classification of studied papers based on above mentioned decision levels. Some of thesepapers studied matter considers only one level of decision making, while the others might haveseveral issues in hand or as pointed out issues of between levels.As it can be noticed from the Table 2 the numbers of times that issues concerned with strategic,tactical and operational decision levels were addressed are almost equal, yet these numbers forstrategic decision level issues are slightly higher than others.
7N. Matinrad et al. / Uncertain Supply Chain Management 1 (2013)Table 2Classification of studied papers in the literature based on decision levelsArticleLakhal et al. (2001)Cakravastia et al. (2002)Perea-López et al. (2003)Chan and Chung (2004a)Wu and Golbasi (2004)Wee and Yang (2004)Chen and Lee (2004)Chan et al. (2004)Chan and Chung (2004b)Bredström et al. (2004)Mo et al. (2005)Chan et al. (2006)Venkatadri et al. (2006)Craven (2007)Herty and Ringhofer (2007)Grunow et al. (2007)Chen et al. (2007)Kim et al. (2008)Shirazi et al. (2008)Al-Othman et al. (2008)Lau et al. (2009)Gumus et al. (2009)Yang et al. (2009)Wang (2009)Nagurney (2009)Mahnam et al. (2009)Wu et al. (2009)Ding et al. (2009)Cintron et al. (2010)P
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