Eco-friendly risk-aware supply chain netwok design using a location routing problem: the case of the LPG industry

초록

Liquefied Petroleum Gas (LPG) has become one of the major fuels in developed countries. The final price of LPG is hugely dependent on logistics costs. There are several studies on facility location and routing planning in fuel distribution systems; however, these are interdependent and the overall cost of the chain may be unjustified if they are considered separately. This paper sought to propose a new multi-objective multi-period location-routing problem (LRP) for the design of a two-echelon LPG supply chain network, and solve it using NSGA-II. The main contribution of this study is to highlight the significance of risk and green factors, by simultaneous incorporation of externalities including CO2 emission, congestion, wear and tear, and noise pollution, and risk factors containing transportation risk and site risk. The proposed mathematical model is tested on the LPG supply chain of a major South Korean LPG company. Results indicate an improvement in the risk and externalities of the network as compared to current network norms.