Quality in operational supply chain networks: an aerospace case study

Supply chain modelling is attracting the interest of many researchers and is a topic that has application in real‐life management practices. In the aerospace industry, quality is an important factor and suppliers are chosen on the basis of quality as well as cost. By integrating cost of quality (COQ) into supply chain network design (SCND), managers could make decisions based on operational costs and quality non‐conformance costs. This paper presents a case study for a leading company in the aerospace industry with COQ integrated into SCND. Further in this paper, we present a model that tailors to a real‐life supply chain with COQ, binary variables for assignable cost representation of supply chain nodes and an n level bill of material integrated; the model resulting is a non‐linear model and is challenging to solve. A simulated annealing‐based solution procedure is then used to solve the overall model.