Tabu Search-based Heuristic for the Selection of Manufacturing and Transportation Partners in Supply Chain

Abstract

A proper selection of collaboration partners is recognized as a critical success factor in supply chain management. In the past, partners for outsourcing production were selected within a closed group of candidates due to the limited information and location of partners. The wide use of Internet and development of e-marketplace make it possible that the partners be selected regardless of their location or nationality. In this study, we propose an analytical approach for the selection of transportation partners as well as manufacturing partners for supply chain management. A mathematical model is developed to show how to minimize the sum of the operation and transportation costs in the presence of alternative production process plans. A heuristic algorithm based on tabu search is developed since the model belongs to a class of NP-hard problems. An example problem is solved to demonstrate the solution procedure.