Integrated strategic and tactical planning in a supply chain network design with a heuristic solution method

In the current competitive business world, viable companies are those that have flexible strategies and long-term plans, by which they can appropriately respond to a dynamic environment. These strategies are used to find the optimum allocation of company income to the main sources of development, for the expansion of company activities and for service expansions. This paper presents a new mathematical model for multiple echelon, multiple commodity Supply Chain Network Design (SCND) and considers different time resolutions for tactical and strategic decisions. Expansions of the supply chain in the proposed model are planned according to cumulative net profits and fund supplied by external sources. Furthermore, some features, such as the minimum and maximum utilisation rates of facilities, public warehouses and potential sites for the establishment of private warehouses, are considered. To solve the model, an approach based on a Lagrangian Relaxation (LR) method has been developed, and some numerical analyses have been conducted to evaluate the performance of the designed approach. (C) 2012 Elsevier Ltd. All rights reserved.