A Comparison between Profit and Economic Value Added Optimization to Design a Supply Chain Network: A Case Study of Food Supply Chain in Vietnam
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Abstract
The research field of food supply chain network design and optimization has expanded significantly. However, most recent studies have focused only on minimizing costs or maximizing profits, neglecting other important financial factors that affect the overall prosperity of the chain. This study generates two scenarios in the design of the supply chain network, comparing the maximization
of profit and Economic Value Added (EVA) to assess their effectiveness in real-world situations. The comparison is based on supplier and potential distribution center selection, along with considerations of production level, production capacity, and the sizes of the plant, distribution centers, and retailers. The methodology considered in this research is based on Mixed-Integer Linear Programming (MILP) under deterministic parameters. The study provides computational results and managerial insights based on a case study of the food supply chain in Southern Vietnam. The findings indicate that the EVA maximization model offers a more precise evaluation of company wealth as compared to the profit maximization model as it can determine more suitable operating supply chain’s decision variables leading to a significant decrease of 11.1% in the invested capital.
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