An integrated multi-objective supply chain network and competitive facility location model

- The results prove that including a utility function in demand may change SC network decisions.
- SC networks need to be modelled multi-objective to generate acceptable results.
- The results show that SC performance is substantially influenced by strategic level (0-1) decisions.
- Tactical level SC network decisions have either minor or no influence on performance of the SC.
- Controlling disruption probabilities through SC nodes and links is crucial for the success.

In this study, a multi-objective supply chain (SC) network optimization model based on the joint SC network optimization and competitive facility location models is proposed to analyse the results of ignoring the impacts of SC network decisions on customer demand. The objectives utilized in the model are profit maximization, sales maximization and SC risk minimization. The unique unknown variable within the model is the demand. The demand at each customer zone is assumed to be determined by price and the utility function. The utility function is defined as the availability of same-day transportation from the distribution centre (DC) to the customer zone. The application of the proposed model is illustrated through a real-world problem and is solved as single and multi-objective models. The results of single and multi-objective models are subsequently compared. After solving the problem, a sensitivity analysis is also conducted to test the applicability of the model with respect to various parameter coefficients, such as price elasticity, one-day replenishment coverage impact, risk factors (disruption probabilities) and the relative weights of the objectives.