A Simulated Annealing Algorithm for the Joint Optimization of Product Family Design and Supplier Selection in SCM

Product family design involves design of various product variants under a product family which aims to satisfy the needs of various market segments. In the development of product families, it is quite common for companies to adopt sourcing strategy for reducing product cost and development time. One major issue of the sourcing is supplier selection. Previous studies have shown that companies commonly spent 60% of product cost on sourcing.Various studies have been conducted in the areas of product family design and supply chain issuesseparately. However, only few studies found so far have investigated the optimal product family design together with supplier selection consideration. In this paper, a simulated annealing method for integrating supplier selection with productfamily design is proposed. The results have shown that optimal product family design with a consideration of supplier selection can be determined, and the specifications of the product variants can be generated. On the other hand, suppliers of components andmodules can be selected with the considerations of minimum sourcing cost. The method reported that the simulated annealing algorithm in solving this problem better with percentage 49-50 % than other algorithms used before.

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