1.

Objective:

This project specifically deals with the modelling and optimization of four echelon supply
chain using the particle swarm optimization and total supply chain operating cost (TSCC) of
the supply chain network is considered as a performance indicator.

The four stages used in this project work are vendors, manufacturing plant, dealers, and
retailers in order of their contributions to the chain. This work considers a constrained
objective problem formulation for a pull based supply chain and proposes the applications of
PSO variants for the performance analysis of the SCM problem.

2. Problem definition and methodology:

Mathematical formulation and optimization of four echelon supply chain architecture using
PSO algorithm

The mathematical model is developed to quantify the relationship between all the decision
variables involved in supply chain network and supply chain decisions in terms of Total
Supply Chain operating Cost (TSCC) of the supply chain as performance indicator. Then the
general structure of particle swarm optimization algorithm for handing constrained four
echelon supply chain network optimisation problem is developed.

Supply chain cost components

1. Vendors Cost

TSMC = ∑ ∑ (CSc , v * Xc , v ,p )...........

c v

2. Transportation cost

TTC = ∑∑∑ ( Xc , v ,p * STC c , v ,p ) + ∑∑ Y p ,d PTC p ,d .......... .....

c v p p d

3. Total Manufacturing cost

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 T M= ∑ C{ M( p) *C(∑ Yp,d) +} {∑ (I Cp * ∑ Ic,p) } . . . . .
d p c

4. Distributor’s cost

TDC = ∑ ∑ ( Zd ,r * DCTCd ,r ) + ∑ ( DCICd * DCI d ).....

d y d

5. Total Operating cost

TSCC = TSMC + TTC + TMC + TDC .......... .....

6. Profit

PROF = ∑ ( Dr * SPr ) − TSCC....................

r

6 Revenue

REV = ∑ (Dr * SP r )......... .......... .

r

Objective Function 1:

Maximize PROF = REV - (TSMC+TTC+TMC+TDC)

Objective Function 2:

Minimize TSCC = TSMC+TTC+TMC+TDC

Subject to following supply chain constraints;

1. Vendor capacity constraint

L( c , v ) ≥ ∑
p
Xc , v ,p.......... .......... ....... ∀c , v

2. Plant capacity constraint:

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 Up ≥ ∑
d
Yp ,d.......... .......... ......... ∀p
3. Distribution Center Capacity Constraint:

Vd ≥ ∑r Zd,r.................................... ∀d
4. Demand Constraint

∑ Zd ,r ≥ Dr .................................. ∀r
d

5. Inventory Balancing Constraint at Plants

∑ Xc, v ,p ≥ ∑ Yp ,d.......... .......... .... ∀c,p

v d

6. Inventory Balancing Constraint at Distribution Centers

∑ Yp ,d ≥ ∑ Zd ,r .......... .......... ......... ∀d

p r

3. Results :

A four echelon supply chain model was considered and modelled with few assumptions.
The model was mathematically represented considering the capacity, inventory balancing
and demand constraints at various stages of supply chain.
The total operating cost of four echelon supply chain was found to be
TOC=1453244.000000 at 66897.000000. both allocation and location decisions result were
generated. The other costs were found to be
TC=27405.000000 TMC=1082836.000000 SC=317160.000000 TID=343.000000.
The profit was found to be Profit=635756.000000

4. Conclusions:
Finally in brief , present work addressed the,

 Supply chain design , mathematical modeling and performance evaluation of four

echelon supply chain networks,
 Effective / efficient procurement plan for raw material/component from different
vendors against their supply capacity was identified.
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 Effective utilization of plant of capacities by proper scheduling of production
quantities to meet the demand and also economic production.
 Effective distribution of products to warehouses , distribution centers against their
capacities.
 This application of PSO algorithm can be used in industries as decision support
system tool or optimizer for mangers to make better decisions as well as helps for the
preparation of best plan for procurement of goods, production scheduling and
distribution of goods to their retailers.

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