Mathematical modelling of aggregate production planning in iron and steel industry: Green supply chain management approach

Developing an aggregate production planning, as one of the most important manufacture tasks, can provide an efficient planning to optimize the companies’ objectives such as minimizing costs and maximizing profits. Also, community’s competitive pressures cause the need for considering green principles in production planning in order to balance environmental and economic performances. Hence, a multi-period, multi-product, multi-supplier, and multi-site aggregate production planning model is proposed to formulate a mathematical model of maximizing profit in green supply chain. Integer quadratic programming is used to solve the problem. Carbon dioxide emission from production and transportation modes are considered as green principle.  The feasibility and validity of the formulated model was tested using data from iron and steel industry as well as a sensitivity analysis on profit function. The results demonstrate the optimal amount of productions in order to maximize profit as well as developing green supply chain. Also, sensitivity analysis shows that profit objective fell steadily due to increase in total CO2 emissions from transportation and production processes. Consequently, some useful managerial insights were suggested regarding the consideration of green practices in aggregate production planning.