A multi-objective optimisation approach for order management: incorporating activity-based costing in supply chains

• Published in: International journal of production research Vol. 48; no. 17; pp. 5007 - 5020
• Main Authors: Khataie, Amirhossein, Defersha, Fantahun M., Bulgak, Akif Asil
• Format: Journal Article
• Language: English
• Published: Abingdon Taylor & Francis Group 01.09.2010; Taylor & Francis; Taylor & Francis LLC
• Subjects: Acceptance; Activity based costing; Applied sciences; Bestellung; Decision making; Decision making models; Decision theory. Utility theory; Exact sciences and technology; Ganzzahlige Optimierung; goal programming; Integer programming; Inventory control, production control. Distribution; Lieferkette; Logistics; Management; Management decisions; Mathematical models; Mathematical programming; mixed-integer programming; Operational research and scientific management; Operational research. Management science; Optimization; Optimization techniques; Profitability; Programming; Prozesskostenrechnung; Studies; Supply chain management; Supply chains; activity-based costing; Profitability; Decision support system; Material flow; Decision making; Multiobjective programming; Partial ordering; Mixed integer programming; Order picking; Modeling; Goal programming; Production management; supply chain management; mixed-integer programming; Capacity constraint; Cost analysis; Manufacturing cost; Logistics
• ISSN: 0020-7543; 1366-588X
• DOI: 10.1080/00207540903095442

Most of the supply chain order management decision making models proposed in the literature are based mainly on the material flow and capacity constraints without any consideration to the profitability factor. In this paper, we develop a multi-objective mixed-integer programming (MIP) model which considers profitability in order to effectively manage order acceptance decisions in supply chains, subject to capacity constraints by using activity-based costing (ABC). While there are a numbers of decision-making models in literature integrating ABC in supply chains, this study expands the previous models with a more customer-oriented approach. The proposed model fulfils a desirable amount of orders completely and accepts selective number of orders partially with an objective of minimising the amount of residual capacity and increasing the profitability.