A Mathematical Modelling for Integrated Construction and Production Supply Chain Network Design

Abstract

Nowadays, the construction industry has become one of the most important and crucial sectors of an economy. With the introduction of the concept of the supply chain and the successful use of supply chain management in many production-based industries, it has also entered the construction industry in recent years. In a classical production-based supply chain, the flow of materials and outputs at the end of the chain consists of manufactured products. However, in the construction supply chain, the final output is a building or structure. In this paper, we propose integrating the construction supply chain with a production supply chain planning problem. The facility location decisions (opening and launching facilities), which are very traditional decisions in production supply chain problems, require significant construction activities. However, the construction supply chain concept is not considered in literature for such an important part of a production-based supply chain. When designing the topology of a production supply chain (numbers, capacities, geographic positions of plants and warehouses), a series of construction activities and projects begin to create the strategic structure for the supply chain. Subsequently, once operational, the production supply chain can start producing products to sell to customers. In this article, we will formulate such an integrated problem using a comprehensive mixed integer linear programming optimization model. The aim is designing an optimal structure for the supply chain with minimal construction and production costs by determining optimal amounts of building materials, raw materials, workers, equipment and machinery, transportation methods, and designs based on required construction size. A wide range of examples and test problems are presented, discussed, and compared in detail to investigate and illustrate the performance of proposed mathematical model.