An Optimization Model for Designing a Supply Chain Network with a Value-Based Management Approach

Subject Areas : Financial and Economic Modelling

Nima Hamta ¹ , Abbas Biglar ² , Mahdi Molana ³

1 - Department of Industrial Engineering, Arak University of Technology
2 - Department of Industrial Engineering, North Tehran branch, Islamic Azad University, Tehran, Iran
3 - Engineering Manager, Manian Khodro Co., Tehran, Iran

Received: 2022-08-07 Accepted : 2022-12-12 Published : 2023-09-01

Keywords: Value-based management Financial decisions, Supply chain network design (SCN), Shareholder value analysis,

Abstract :

Traditional approaches applied in supply chain management consider only the physical logistic operations and ignore the financial aspects of the chain. In this study, a mathematical model has been developed to address the supply chain network design problem with a value-based management approach. This model integrates both operations and financial aspects to maximize the value created and measured by shareholder value analysis (SVA) as an objective function. The results attributed to the developed model and the basic model are compared. The results indicate that creating more value for the company and its shareholders is achievable with appropriate financial decisions. To validate and show the applicability of the proposed model, it was solved by GAMS software with data provided by literature. Finally, sensitivity analyses on financial parameters were performed to evaluate the results. The results clearly reveal the improvement of using the new approach and convince managers to take advantage of the proposed approach.

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