Fuzzy Multiple Objective Decision Making

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11

Multiple Objective

Planning for Supply

Chain Production and

Distribution Model:

Bicycle Manufacturer

Because of globalization, the supply chain has become increasingly important for

many enterprises because it involves ow process controls and levels of manage-

ment integration. Components of the supply chain include raw materials, produc-

tion, distribution, retail sales, and after-sales service to consumers. The related

primary objectives are to (1) lower the total costs of production along the sup-

ply chain and (2) increase production efciency. Through the efforts of both gov-

ernment and industry, Taiwan was admitted into the World Trade Organization

(WTO) on January 1, 2001. Within the context of the WTO, manufacturers face

global competition and thus must accelerate the ows of materials and informa-

tion. As a result, the development of an effective supply chain is essential for an

industry to become successful.

Bicycle manufacturing, generally considered a conventional industry, demands

massive labor and capital investments. Within the past 50 years, the industry sup-

ply chain has expanded to include up-, middle-, and down-stream manufacturers,

making Taiwan one of the signicant bicycle manufacturing centers of the world.

In 1980, Taiwan was the world’s largest exporter of bicycles, surpassing even Japan.

Even though bicycles are not a high technology product, they follow trends of fash-

ion, creativity, and diversity so speed of supply is a critical factor for remaining

competitive in the face of changing demands of consumers.

Because Taiwan’s bicycle industry is affected by international competition, man-

ufacturers must develop global management abilities to confront changing situations.

This chapter considers multiple objective production and distribution, focusing on

Taiwan’s conventional bicycle manufacturing industry. It discusses enterprise prot

and customer service levels for multi-objective programming to develop a produc-

tion-and-distribution model for bicycle manufacturers in Taiwan.

Five methods have been adopted for comparison: multi-objective compromise

programming, fuzzy multi-objective programming, weighted multi-objective

compromise programming, weighted fuzzy multi-objective programming, and

126 Fuzzy Multiple Objective Decision Making

two-phase fuzzy multi-objective programming for analyzing vector-valued optimi-

zation (Salukvadze, 1971a and b, 1979) through various methods. Finally, weighted

multi-objective programming is used to conduct sensitivity analysis to obtain out-

comes that manufacturers can use for reference in developing their supply chains.

The results show that increases of per-unit production costs decrease total prots

in real empirical studies. If the unit inventory cost increases in an effort to improve

customer service levels, total prot may increase, but not signicantly. Furthermore,

shortage cost has an interactive effect on an enterprise and increased inventory cost

will lower the shortage cost for achieving satisfaction levels.

11.1 LITERATURE ON SUPPLY CHAIN AND MULTI-OBJECTIVE

PROGRAMMING FOR PRODUCTION AND DISTRIBUTION

Since this study explores the issues of production and distribution of bicycles that

relate to management operations and the industrial supply chain, we rst review the

literature discussing supply chain management. We then present studies on multi-

objective programming, compromise programming, fuzzy multi-objective program-

ming, weighted multi-objective programming, and two-phase fuzzy multi-objective

programming because they concern the production and distribution of bicycles.

11.1.1 relevant supply chain literature

Chandra and Fisher (1994) dealt with the production and delivery processes of a

single factory with a single product over multiple periods. Comparing the separation

and integration models of production and transportation problems, they found that

the integration model of production and delivery could help lower total costs.

Nagata et al. (1995) examined the production and transportation problems of

multiple products and multiple factories over multiple periods, using multi-objective

and fuzzy multi-objective models for programming. Their programming problem

for multiple periods included utilizing uncertain information when considering a

management plan so as to construct a reasonable multi-objective production and

transportation model.

Tzeng et al. (1996) addressed practical issues, using fuzzy bi-criteria multi-index

linear programming to deal with uncertain supply and demand environments related

to coal procurement and delivery schedules for the Taiwan Power Company (TPC).

The company had to deal with multiple destinations, varied goals, and several types

of shipping vessels.

Petrovic et al. (1998, 1999) used fuzzy models and simulation for a supply chain

and developed a decision-making system for an uncertain environment. They deter-

mined the inventory level and the order amounts using a supply chain model that

considered time and cost constraints to simulate operation control.

Van der Vorst et al. (1998) considered that supply chain management should con-

sider decreasing or limiting uncertainty so that the integral benets of the chain