Designing a clothing supply chain network considering pricing and demand sensitivity to discounts and advertisement

¹ Department of Industrial Engineering, Babol Noshirvani University of Technology, Babol, Iran
² Department of Industrial Engineering, Iran University of Science and Technology, Tehran, Iran
³ Division of Engineering Management and Decision Sciences, College of Science and Engineering, Hamad Bin Khalifa University, Doha, Qatar
⁴ Department of Engineering for Innovation, University of Salento, Lecce, Italy

^* Corresponding author: ctriki@hbku.edu.qa

Received: 29 October 2019
Accepted: 11 September 2020

Abstract

These days, clothing companies are becoming more and more developed around the world. Due to the rapid development of these companies, designing an efficient clothing supply chain network can be highly beneficial, especially with the remarkable increase in demand and uncertainties in both supply and demand. In this study, a bi-objective stochastic mixed-integer linear programming model is proposed for designing the supply chain of the clothing industry. The first objective function maximizes total profit and the second one minimizes downside risk. In the presented network, the initial demand and price are uncertain and are incorporated into the model through a set of scenarios. To solve the bi-objective model, weighted normalized goal programming is applied. Besides, a real case study for the clothing industry in Iran is proposed to validate the presented model and developed method. The obtained results showed the validity and efficiency of the current study. Also, sensitivity analyses are conducted to evaluate the effect of several important parameters, such as discount and advertisement, on the supply chain. The results indicate that considering the optimal amount for discount parameter can conceivably enhance total profit by about 20% compared to the time without this discount scheme. When the optimized parameter is taken into account for advertisement, 12% is obtained as total profit.