Optimizing the supply chain strategy of a multi-unit Finnish nursery company

Abstract

This paper introduces a capacitated mixed integer programming (CMIP) model for solving an integrated production-distribution system design problem (PDSDP) in the seedling supply chain management (SCM) of a multi-unit Finnish nursery company. The model was originally developed from a strategic perspective in which a company desires to evaluate the expansion or closure of its facilities. Nevertheless, the model is also used for solving operational and tactical level problems by applying applicable constraints. The data were collected from the company studied. The results proved that economies of scale could be exploited in seedling production more than the company does today; Compared to the company's current supply chain strategy with 5 nursery units producing seedlings, when other supply chain strategies were applied the number of nursery units decreased by 2-4 units, and cost savings in the supply chain varied from 11.3% to 21.3%.