Risk and value-added balancing model for a sustainable industry's supply chain

Abstract

Industry's supply chain faces obstacles in maintain sustainability, especially in fair profit allocation, increase value added processing and manage risk. The research aimed to formulate risk and value-added balancing model to determine an ideal price in each supply chains stakeholder of sugar industry. Value added was analyzed through Hayami approach while risk was assessed through House of Risk framework. Risk and value added were optimized by using Multi-objective particle swarm optimization (MOPSO) and LINMAP to find an ideal solution of Pareto. A balanced risk and value added was applied to determine an ideal and fair price of supply chain product in each stage stakeholders. The result shows that upstream stakeholders suffer with higher risk while downstream savors major value added and profit. MOPSO algorithm fires well in finding alternative solutions of risk and value-added optimization and LINMAP succeed to find an ideal solution. The research successfully determines the ideal price of product in each stakeholder and distributes profit with considering a balanced risk and value added, product quality, and current product price. For further research, it requires a predicted and sensitivity model to enrich the price scheme of the supply chain.