June  2019, 9(2): 113-132. doi: 10.3934/naco.2019009

Integrated modeling and optimization of material flow and financial flow of supply chain network considering financial ratios

1. 

State Key Laboratory of Digital Manufacturing Equipment & Technology, School of Mechanical Science and Engineering, Huazhong University of Science and Technology, Wuhan 430074, PR China

2. 

Department of Manufacturing and Industrial Engineering, Faculty of Mechanical Engineering, Universiti Teknologi Malaysia, 81310 Skudai, Malaysia

3. 

Department of Industrial Engineering. Faculty of Industrial Engineering, Science and Art University of Yazd, Yazd, Iran

The reviewing process of this paper was handled by Associate Editors A. (Nima) Mirzazadeh, Kharazmi University, Tehran, Iran and Gerhard-Wilhelm Weber, Middle East Technical University, Ankara, Turkey. This paper was for the occasion of The 12th International Conference on Industrial Engineering (ICIE 2016), which was held in Tehran, Iran during 25-26 January, 2016

Received  November 2016 Revised  December 2018 Published  January 2019

In today's competitive environment, businesses are searching for tools and instruments, using which they can reduce their costs as much as possible in order to increase profits. The supply chain as a process which requires comprehensive management can be a great help in this regard for companies. The majority of approaches evaluated in supply chain primarily deal with logistic and material flows and neglect a lot of financial dimensions. This is while the financial flow in the supply chain can play an effective role in improving and optimizing the chain and contribute heavily to the profitability of the business. This paper deals with the financial flow of the supply chain model along with the material flow. It indicates that while optimizing the financial flow will provide the maximum profit for the plant, through simultaneous modeling of both these flows, better results can be reached. On the other hand, optimizing the financial flow allows the financial factors to be also considered in the model, which helps the business reach higher profits and better management of financial processes, which in turn shifts the business towards a modern industrial unit.

Citation: Qiong Liu, Ahmad Reza Rezaei, Kuan Yew Wong, Mohammad Mahdi Azami. Integrated modeling and optimization of material flow and financial flow of supply chain network considering financial ratios. Numerical Algebra, Control & Optimization, 2019, 9 (2) : 113-132. doi: 10.3934/naco.2019009
References:
[1]

F. AltiparmakM. Gen and L. Karaoglan, A steady state genetic algorithmfor multi product supply chain network design, Computer and Industrial Engineering, 56 (2009), 521-537.   Google Scholar

[2]

H. Badri and M. Bashiri, Integrated strategic and tactical planning in supply chain network design wth a heuristic solution method, Computer and Operation Research, 40 (2013), 1143-1154.  doi: 10.1016/j.cor.2012.11.005.  Google Scholar

[3]

Y. Cardona-Vald${\rm\acute{e}}$sA. ${\rm\acute{A}}$lvarez and D. Ozdemir, A bi-objective supply chain design problem with uncertainty, Transportation Research Part C, 19 (2011), 821-832.   Google Scholar

[4]

S. H. ElgazzarN. S. TipiN. J. Hubbard and D. Z. Leach, Linking supply chain 22 performance to a company's financial, European Journal of Operational Research, 223 (2012), 276-289.   Google Scholar

[5]

R. B. FrancaE. C. Jones and J. P. Richards, Multi-objective stochastic supply chain modeling to evaluate tradeoffs between profit and quality, Int. J. of Production Economics, 127 (2010), 292-299.   Google Scholar

[6]

S. Gupta and K. Dutta, Modeling of financial supply chain, European Journal of Operational Research, 21 (2011), 47-56.  doi: 10.1016/j.ejor.2010.11.005.  Google Scholar

[7]

A. Ivanovic and L. Fuxman, Fundamental of financial supply chain management, Megabrand, (2010), 63–73. Google Scholar

[8]

P. KristofikJ. KokS. D. Vries and J. V. Sten-vsn$\grave{{\rm{t}}}$ Hoff, Financial supply chain management- challenges and obstacles, ACRN Journal of Entrepreneueurship Perspectives, 1 (2012), 132-143.   Google Scholar

[9]

J. M. LainezL. Puigjaner and G. V. Reklaitis, Financial and financial engineering considerations in supply chain and product development pipeline management, Computers and Chemical Engineering, 33 (2009), 1999-2011.   Google Scholar

[10]

C. C. Lin and Y. C. Wu, Optimal pricing for build to order supply chain design under price dependent stochastic demand, Transportation Research Part B, 56 (2013), 31-49.   Google Scholar

[11]

P. Longinidis and M. C. Georgiadis, Integration of financial statement analysis in the optimal design of supply chain networks under demand uncertainty, Int. J. Production Economics, 129 (2011), 262-276.   Google Scholar

[12]

L. Moussawi-Haidar, W. Dbouk, M. Y. Jaber and I. H. Osman, Coordinating a three-level supply chain with delay in payments and a discounted interest rate, Computers & Industrial Engineering, 69 (2013), 29–42. Google Scholar

[13]

L. Moussawi-Haidar and M. Y. Jaber, A joint model for cash and inventory management for a retailer under delay in payments, Computers & Industrial Engineering, 66 (2014), 758–767. Google Scholar

[14]

P. NgaThanhB. Bostel and O. Peton, Dynamic model for facility location in the design of complex supply chain, Int. J. Production Economics, 113 (2008), 678-693.   Google Scholar

[15]

K. NurjanniM. S. Carvalho and L. Costa, Green supply chain design: A mathematical modeling approach based on a multi-objective optimization model, Int. J. Production Economics, 183 (2017), 421-432.   Google Scholar

[16]

T. Pham and P. Yenradee, Optimal supply chain network design with process network and BOM under uncertainties: A case study in toothbrush industry, Computers & Industrial Engineering, 108 (2017), 177–191. Google Scholar

[17]

M. Protopappa-Sieke and R. W. Seifert, Interrelating operational and financial performance measurements in inventory control, European Journal of Operational Research, 204 (2010), 439-448.   Google Scholar

[18]

N. S. Raghavan and V. K. Mishra, Short-term financing in a cash-constrained supply chain, Int. J. Production Economics, 134 (2014), 407-412.   Google Scholar

[19]

M. RamezaniA. Kimiagari and B. Karimi, Closed-loop supply chain network design: A financial approach, Applied Mathematical Modelling, 38 (2014), 4099-4119.   Google Scholar

[20]

A. Ross and V. Jayaraman, An evaluation of new heuristics for the location of cross-docks distribution centers in supply chain network design, Computer Industrial Engineering, 55 (2008), 64-79.   Google Scholar

[21]

J. M. ShiG. Q. Zhang and J. C. Sha, A Lagrangian based solution algorithm for a build to order supply chain network design problem, Advanced in Engineering Softwar, 49 (2012), 21-28.   Google Scholar

show all references

References:
[1]

F. AltiparmakM. Gen and L. Karaoglan, A steady state genetic algorithmfor multi product supply chain network design, Computer and Industrial Engineering, 56 (2009), 521-537.   Google Scholar

[2]

H. Badri and M. Bashiri, Integrated strategic and tactical planning in supply chain network design wth a heuristic solution method, Computer and Operation Research, 40 (2013), 1143-1154.  doi: 10.1016/j.cor.2012.11.005.  Google Scholar

[3]

Y. Cardona-Vald${\rm\acute{e}}$sA. ${\rm\acute{A}}$lvarez and D. Ozdemir, A bi-objective supply chain design problem with uncertainty, Transportation Research Part C, 19 (2011), 821-832.   Google Scholar

[4]

S. H. ElgazzarN. S. TipiN. J. Hubbard and D. Z. Leach, Linking supply chain 22 performance to a company's financial, European Journal of Operational Research, 223 (2012), 276-289.   Google Scholar

[5]

R. B. FrancaE. C. Jones and J. P. Richards, Multi-objective stochastic supply chain modeling to evaluate tradeoffs between profit and quality, Int. J. of Production Economics, 127 (2010), 292-299.   Google Scholar

[6]

S. Gupta and K. Dutta, Modeling of financial supply chain, European Journal of Operational Research, 21 (2011), 47-56.  doi: 10.1016/j.ejor.2010.11.005.  Google Scholar

[7]

A. Ivanovic and L. Fuxman, Fundamental of financial supply chain management, Megabrand, (2010), 63–73. Google Scholar

[8]

P. KristofikJ. KokS. D. Vries and J. V. Sten-vsn$\grave{{\rm{t}}}$ Hoff, Financial supply chain management- challenges and obstacles, ACRN Journal of Entrepreneueurship Perspectives, 1 (2012), 132-143.   Google Scholar

[9]

J. M. LainezL. Puigjaner and G. V. Reklaitis, Financial and financial engineering considerations in supply chain and product development pipeline management, Computers and Chemical Engineering, 33 (2009), 1999-2011.   Google Scholar

[10]

C. C. Lin and Y. C. Wu, Optimal pricing for build to order supply chain design under price dependent stochastic demand, Transportation Research Part B, 56 (2013), 31-49.   Google Scholar

[11]

P. Longinidis and M. C. Georgiadis, Integration of financial statement analysis in the optimal design of supply chain networks under demand uncertainty, Int. J. Production Economics, 129 (2011), 262-276.   Google Scholar

[12]

L. Moussawi-Haidar, W. Dbouk, M. Y. Jaber and I. H. Osman, Coordinating a three-level supply chain with delay in payments and a discounted interest rate, Computers & Industrial Engineering, 69 (2013), 29–42. Google Scholar

[13]

L. Moussawi-Haidar and M. Y. Jaber, A joint model for cash and inventory management for a retailer under delay in payments, Computers & Industrial Engineering, 66 (2014), 758–767. Google Scholar

[14]

P. NgaThanhB. Bostel and O. Peton, Dynamic model for facility location in the design of complex supply chain, Int. J. Production Economics, 113 (2008), 678-693.   Google Scholar

[15]

K. NurjanniM. S. Carvalho and L. Costa, Green supply chain design: A mathematical modeling approach based on a multi-objective optimization model, Int. J. Production Economics, 183 (2017), 421-432.   Google Scholar

[16]

T. Pham and P. Yenradee, Optimal supply chain network design with process network and BOM under uncertainties: A case study in toothbrush industry, Computers & Industrial Engineering, 108 (2017), 177–191. Google Scholar

[17]

M. Protopappa-Sieke and R. W. Seifert, Interrelating operational and financial performance measurements in inventory control, European Journal of Operational Research, 204 (2010), 439-448.   Google Scholar

[18]

N. S. Raghavan and V. K. Mishra, Short-term financing in a cash-constrained supply chain, Int. J. Production Economics, 134 (2014), 407-412.   Google Scholar

[19]

M. RamezaniA. Kimiagari and B. Karimi, Closed-loop supply chain network design: A financial approach, Applied Mathematical Modelling, 38 (2014), 4099-4119.   Google Scholar

[20]

A. Ross and V. Jayaraman, An evaluation of new heuristics for the location of cross-docks distribution centers in supply chain network design, Computer Industrial Engineering, 55 (2008), 64-79.   Google Scholar

[21]

J. M. ShiG. Q. Zhang and J. C. Sha, A Lagrangian based solution algorithm for a build to order supply chain network design problem, Advanced in Engineering Softwar, 49 (2012), 21-28.   Google Scholar

Figure 1.  The Selected Supply Chain
Figure 2.  Trend of Changes in Exogenous Cash and Accounts Receivable during the Time Periods $ t $
Figure 3.  Liabilities in Time Periods for both Financial and Material Flows
Figure 4.  Cash in Time Periods for both Financial and Material Flows
Figure 5.  Income from Sales in each Time Period
Figure 6.  Net Profit in each Time Period
Figure 7.  Return on Sales in each Time Period
Table 1.  Results Obtained from Solving the Model
$\Delta SA$$\Delta LA$$\Delta SL$$\Delta LL$$\Delta E$Profile
Financial flow544349105790285000678639301233
Material flow51384069600285000549300380341
$\Delta SA$$\Delta LA$$\Delta SL$$\Delta LL$$\Delta E$Profile
Financial flow544349105790285000678639301233
Material flow51384069600285000549300380341
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