A two objective model for decision making in a supply chain

Abstract Strategic decisions on establishing a supply chain network (SCN) encompass more than one criterion, for example, minimization of costs and maximization of customer service levels. These criteria have to be analyzed along with constraints such as capacity commitment by the suppliers and the manufacturers for the production of a particular product. In this paper, estimated demand from various retail units, capacity commitment by suppliers, assemblers and third party warehouses have been considered as constraints in order to develop a two-objective decision-making model for the choice of suppliers and warehouses for a SCN design. The SCN is considered for the production of one product through an assembly of four modules supplied by different suppliers. It is shown that compared to the optimal solutions generated by considering only one objective, the choice of suppliers and warehouses in the network differ when two objectives are considered simultaneously. A few scenarios are developed to show the effect on the network solution due to changes in DMs’ preferences on various objectives. This way, decision-making becomes interactive. It is expected that the concept can be used by the researchers and the DMs in meeting their supply chain design objectives.

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