Designing an integrated multi-echelon agile supply chain network: a hybrid taguchi-particle swarm optimization approach

Abstract

The present paper attempts to explore the integration of production, distribution and logistics activities at the strategic decision making level where, the objective is to design a multi-echelon supply chain network considering agility as a key design criterion. The design network conceived here addresses a class of five echelons of supply chains including suppliers, plants, distribution centers, cross-docks and customer zones. The problem has been mathematically formulated as a multi-objective optimization model that aims to minimize the cost (fixed and variable) and maximizes the plant flexibility and volume flexibility. The notion of cross-dock has been introduced as an intermediate level between distribution centers and customer zones to increase the profitability of manufacturing and service industries. In order to solve the underlying problem, a novel algorithm entitled hybrid taguchi-particle swarm optimization (HTPSO) has been proposed that incorporates the characteristics of statistical design of experiments and random search techniques. The main idea is to integrate the fundamentals of taguchi method i.e. orthogonal array and signal to noise ratio (SNR) in the PSO meta-heuristic to minimize the effect of the causes of variations. The proposed model has been authenticated by undertaking problem instances of varying size. Extensive computational experiments are conducted to validate the same and also the efficacy of the proposed HTPSO algorithm. The results obtained reveal that proposed solution methodology is an effective approach to solve the underlying problem.