Many-objective optimization of a three-echelon supply chain: A case study in the pharmaceutical industry

JAM Santos, JMC Sousa, SM Vieira, AF Ferreira
in Computers & Industrial Engineering, Volume 173, November 2022 , 108729 [link, pdf]

October 15, 2022


This paper proposes an order-up-to (OUT) replenishment policy integrated with inventory routing optimization, formulated as a three-echelon supply chain. The OUT policy is used for raw material purchasing and transportation from the suppliers to support warehouses. Inventory routing optimization is applied to transport the raw materials to the main warehouse when required, where manufacturing operations take place. The optimization problem is solved using a many-objective genetic algorithm. The proposed optimization framework can be applied to the pharmaceutical industry and to any other highly dynamic industry with large product portfolios. This paper presents a real-world case in the pharmaceutical industry from Hovione Farmaciência SA. The performance of the many-objective optimization is compared with a summed single-objective simplification, showing that while the total cost reduces by using single-objective optimization, the optimal scenarios offered by the many-objective optimization may provide additional insight to decision-makers and act as a decision support system, being more inline with the human-machine cooperation trends of the industry.

Keywords: | Many objective optimization | Inventory routing optimization | Metaheuristic optimization decision support | Three echelon supply chain optimization | Order up to replenishment policy |