A robust optimization model to design an IoT-based sustainable supply chain network with flexibility

Abstract

Supply chain network design is one of the most important issues in today’s competitive environment. Moreover, the ratio of transportation costs to the income of manufacturing companies has increased significantly. In this regard, strategic decisions, as well as tactical decisions making, are of concern for supply chain network design. In this research, a flexible, sustainable, multi-product, multi-period, and Internet-of-Things (IoT)-based supply chain network with an integrated forward/reverse logistics system is configured where the actors are suppliers, producers, distribution centers, first- and second-stage customers, repair/disassembly centers, recycling centers, and disposal centers. In order to create flexibility in this supply chain, it is possible to dispatch directly to customers from distribution centers or manufacturing plants. For direct shipping, the application IoT system is taken into account in the transportation system to make them able to manage direct and indirect delivery at the same time. The options and considerations are then incorporated into a Multi-Objective Mixed-Integer Linear Programming model to formulate the problem which is then converted into a single-objective model using Goal Programming (GP) method. Moreover, in order to deal with uncertainty in the demand parameter, robust optimization approach is applied. The obtained results from a numerical example reveal that the proposed model is able to optimally design the supply chain network whose robustness is highly dependent on the budgets of uncertainty whereas up to 213.528% increase in the GP objective function is observed. © The Author(s), under exclusive licence to Springer-Verlag GmbH Germany, part of Springer Nature 2023.