A hub location model in the sustainable supply chain considering customer segmentation

Abstract

Purpose

This paper aims to study the hub transportation system in supply chain networks which would contribute to reducing costs and environmental pollution, as well as to economic development and social responsibility. As not all customers tend to buy green products, several customer groups should be considered in terms of need type.

Design/methodology/approach

In this paper, a multi-objective hub location problem is developed for designing a sustainable supply chain network based on customer segmentation. It deals with the aspects of economic (cost reduction), environment (minimizing greenhouse gas emissions by the transport sector) and social responsibility (creating employment and community development). The epsilon-constraint method and augmented epsilon-constraint (AEC) method are used to solve the small-sized instances of this multi-objective problem. Due to the non-deterministic polynomial-time hardness of this problem, two non-dominated sorting genetic algorithm-II (NSGA-II) and multi-objective grey wolf optimizer (MOGWO) metaheuristic algorithms are also applied to tackle the large-sized instances of this problem.

Findings

As expected, the AEC method is able to provide better Pareto solutions according to the goals of the decision-makers. The Taguchi method was used for setting the parameters of the two metaheuristic algorithms. Considering the meaningful difference, the MOGWO algorithm outperforms the NSGA-II algorithm according to the rate of achievement to two objectives simultaneously and the spread of non-dominance solutions indexes. Regarding the other indexes, there was no meaningful difference between the performance of the two algorithms.

Practical implications

The model of this research provides a comprehensive solution for supply chain companies that want to achieve a rational balance between the three aspects of sustainability.

Originality/value

The importance of considering customer diversity on the one hand and saving on hub transportation costs, on the other hand, triggered us to propose a hub location model for designing a sustainable supply chain network based on customer segmentation.

Citation

Heidari, A., Imani, D.M. and Khalilzadeh, M. (2021), "A hub location model in the sustainable supply chain considering customer segmentation", Journal of Engineering, Design and Technology, Vol. 19 No. 6, pp. 1387-1420. https://doi.org/10.1108/JEDT-07-2020-0279