What is Supply Chain Network Design

This chapter introduces the reader to Supply Chain Network Design (SCND) models that include the Cost Of Quality (COQ) among the relevant costs. In contrast to earlier models, the COQ is computed internally as a function of decisions taken as part of the design of the supply chain. Earlier models assume exogenously given COQ functions. Background information is provided on previous COQ modeling and on supply chain network design models. The authors’ COQ modeling is described in detail as is the SCND model that incorporates COQ. The COQ modeling includes prevention, appraisal, and both internal and external failure costs. Solution methods based on metaheuristics such as simulated annealing and the genetic algorithm are provided, including details on parameter tuning and computational testing. A genetic algorithm was found to yield the best results, followed by the simulated annealing approach. Topics for further research are provided as well as an extensive list of references for further reading.