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An integrated NPV-based supply chain configuration with third-party logistics services

Author

Listed:
  • Remica Aggarwal

    (IIT Delhi)

  • S. P. Singh

    (IIT Delhi)

Abstract

A well-designed supply chain configuration yields positive net value by creating benefits, reducing costs, and improving firm’s profitability. Nowadays, supply chain also includes third-party logistics service providers (3PLs) which are usually contracted by the supplier or manufacturer to supply integrated logistics services to the buyers or consumers. Efficient utilization of 3PLs is expected to bring benefits such as reducing total costs thereby maximizing profits. The purpose of this research paper is to propose a multi-objective optimization model to derive an integrated net present value-based supply chain configuration for a manufacturing enterprise incorporating the effect of third-party logistics service providers in an uncertain demand scenario. Firstly, the paper presents the conceptual framework considering the third-party logistics service providers for a manufacturing enterprise and thereafter a multi-objective optimization model is proposed to find a compromise solution to NPV maximization and total cost minimization. The model also makes use of Chance Constraint methodology to handle demand uncertainties.

Suggested Citation

  • Remica Aggarwal & S. P. Singh, 2019. "An integrated NPV-based supply chain configuration with third-party logistics services," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 18(5), pages 367-375, October.
    • Handle: RePEc:pal:jorapm:v:18:y:2019:i:5:d:10.1057_s41272-019-00200-x
    DOI: 10.1057/s41272-019-00200-x
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    References listed on IDEAS

    as
    1. Aguezzoul, Aicha, 2014. "Third-party logistics selection problem: A literature review on criteria and methods," Omega, Elsevier, vol. 49(C), pages 69-78.
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    4. Azaron, A. & Brown, K.N. & Tarim, S.A. & Modarres, M., 2008. "A multi-objective stochastic programming approach for supply chain design considering risk," International Journal of Production Economics, Elsevier, vol. 116(1), pages 129-138, November.
    5. Marcus Brandenburg, 2015. "Low carbon supply chain configuration for a new product – a goal programming approach," International Journal of Production Research, Taylor & Francis Journals, vol. 53(21), pages 6588-6610, November.
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    7. A. Charnes & W. W. Cooper, 1959. "Chance-Constrained Programming," Management Science, INFORMS, vol. 6(1), pages 73-79, October.
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    Cited by:

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