Fuzzy optimization of location decisions in supply chain management

Fuzzy optimization models provide a powerful decision support tool for optimization models in fuzzy environment. In this paper fuzzy goal programming (FGP) is integrated with the fuzzy analytic hierarchy process (FAHP) to determine optimal plant and distribution centre locations in a supply chain with special focus on the operational efficiencies of the distribution centres. The integrated FGP-FAHP model incorporates multiple conflicting objectives as demanded by the decision process. The concept of fuzzy logic is utilized to model the variation of demands at retails centres that makes the model more sophisticated to the real SCM problem. The FAHP is used to model the decision maker preferences and to handle information ambiguaties in the comparison judgment by introducing a linguistic variable, and to find the relative weights of multiple objectives in FGP. In addition to, the proposed FGP-FAHP provides a risk management decision support tool in SCM problem associated with information ambiguities.