Designing a closed-loop supply chain multi-objective optimization model with the aim of supplier selection and order allocation (case study: Iran's retail stores for protein products)

Abstract

In today's competitive business landscape, the efficient management of supply chains has become a cornerstone of success for economic enterprises. Supplier selection, as the initial link in the supply chain, holds significant sway over various critical factors, such as product quality, return rates, and production costs. However, the real world is rife with uncertainties, making the application of a fuzzy approach highly advisable. This study's primary objective is to develop a model for supplier selection and order quantity determination for perishable protein products in a retail setting under uncertain conditions. Initially, a comprehensive fuzzy multi-objective model is designed for Kourosh Protein, a company in the closed-loop supply chain, aiming to minimize costs, waste, and maximize profit, customer satisfaction, quality, and profit margin in the face of uncertainty. Subsequently, this full-fledged fuzzy multi-objective model is transformed into a deterministic single-objective model using the Sharma and Agarwal method (2018), yielding optimal order quantities from each supplier. The model's practical implementation in an Iranian retail store for protein products, such as sausages, bologna, hamburgers, etc., demonstrates its potential to reduce costs and boost profits.IntroductionThe global population's rapid expansion and shifts in lifestyle have significantly elevated the food sector's importance in the global economy, specifically in Sustainable Food Supply Chain Management (SFSCM). SFSCM plays a pivotal role in balancing economic, social, and environmental criteria to optimize supply chain performance. Within the complex food supply chain, suppliers wield considerable influence due to their impact on product attributes, safety, quality, and perishability. Supplier selection, a critical facet of SFSCM, substantially affects a company's strategic and operational performance, product pricing, and quality. In this context, this research introduces a fully fuzzy multi-objective model (FFMOP) to enhance the sustainable supply chain performance of a retail company's protein products. Given the inherent uncertainties associated with supplier selection, the proposed model incorporates an extensive array of variables to simulate real-world scenarios. This innovative approach aims to address identified gaps in existing literature, providing a more robust and realistic tool for bolstering supply chain sustainability.Materials and MethodsThis study constructs a full fuzzy multi-objective model with the objective of determining optimal order quantities within the food supply chain while integrating sustainability criteria. The analyzed supply chain network encompasses multiple suppliers, a single retailer, and end consumers, characterized by multi-product and multi-level interactions. The model seeks to optimize profit, customer satisfaction, brand acceptance, quality, profit margin, and minimize waste production while determining the optimal order volume for each product from each supplier. Reviewing the existing literature reveals various approaches to tackle Full Fuzzy Multi-Objective Problems. This research employs the methodology proposed by Sharma & Aggarwal in 2018 to solve the FFMOP model. After defuzzification, the final model is solved using GAMS software to determine the optimal values of decision variables.ResultsThis research utilizes a case study of an Iranian retail company with eight main suppliers providing 15 protein food products. However, the focus is primarily on four key products: sausages, bologna, hamburgers, and pizza cheese, which are examined. Data for the study was collected from historical company records and interviews with experts from June 2021 to 2022. Model parameters are defined using trapezoidal fuzzy numbers. A comparison of optimal order quantities with the company's actual orders and sales reveals that the proposed model for order allocation leads to reduced ordering, maintenance, and procurement costs for the company. Additionally, the model mitigates waste resulting from unsold products.ConclusionSupplier selection stands as a pivotal process in an effective supply chain, exerting substantial influence on a company's strategic outcomes and performance metrics. This study employs a full fuzzy multi-objective model to identify the most suitable supplier and determine optimal orders within a sustainable food supply chain context. To better mimic real-world conditions, variables and parameters are treated as trapezoidal fuzzy numbers. A comparison of the model's outputs with actual sales data indicates that this methodology aligns more accurately with sales figures. Consequently, applying this model has the potential to reduce waste production and economic consequences. The study's achievement lies in selecting a supplier through a methodology that simultaneously considers sustainability criteria within a fully fuzzy environment while determining optimal order quantities from various suppliers. Moreover, the model's flexibility allows for its application across diverse industries, including dairy and dried fruit, for procuring and selling an array of products from potential suppliers.

Keywords

• supplier selection
• fully fuzzy multi-objective linear programming
• supply chain performance optimization
• closed-loop supply chain