Cost and environmental trade-offs in supply chain network design and planning: the merit of a simulation-based approach

In this paper, a simulation-based optimisation methodology is presented for the joint design and planning of globalised supply chains under cost and CO2 emissions minimisation objectives. The aim of this work is to investigate whether or not, and how, the critical decisions and insights – that derive from the respective analytical optimisation process – change, as their critical assumptions e.g. deterministic lead times, no-backorders constraints, power-of-two assumptions, etc., are relaxed. To that end, the proposed methodology is applied to a real-world supply chain, and the outcomes are directly compared to those derived through the related analytical process. The results reveal that the cost and emissions benefits, as well as the relevant managerial insights, gained through the simulation-based approach are meaningful and could provide new feasible, costand environmental-efficient options to the design and planning decisions of such networks.