On the optimization of supply chain networking decisions

On the optimization of supply chain networking decisions

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Article ID: iaor20013941
Country: Netherlands
Volume: 129
Issue: 2
Start Page Number: 259
End Page Number: 270
Publication Date: Mar 2001
Journal: European Journal of Operational Research
Authors: , , ,
Keywords: programming: integer
Abstract:

Companies strive to position themselves to maximize the value they add to the supply chains in which they are embedded. This raises strategic questions such as: Which durable resources should be developed to enhance current core competencies? Which activities should be externalized and to which potential partner should they be given? Which internal activities should be preserved and developed? How should the resources of the enterprise be allocated to activities? The aim of this paper is to propose a mathematical programming model of the extended enterprise which can be used to investigate this type of strategic networking issues. A number of general network modeling constructs are first proposed. A model to optimize the supply chain structure under specific assumptions on the nature of production, cost and value functions in typical production/distribution companies is then derived. A heuristic to obtain solutions from the model is also presented. Finally, an example based on a refrigerator company is used to illustrate the usefulness of the approach.

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