General Optimization Concept in Designing Supply Chain Network for a Manufacturer

The Optimization principles are now considered center of Supply Chain Management (SCM) process. In this paper we will review conceptually the general approach of Optimization of Supply Chain Network for manufacturers. The mathematical modelling which are used for the designing Supply Chain Network are listed and are explained. These models are proved useful for manufacturers who are running factories. Generally SCM managers are trying to maximize the profitable operation of their manufacturing and distribution supply chain. This could include measures like maximizing Gross Margin Return On Inventory Invested (GMROII) (balancing the cost of inventory in the supply chain with availability to the customer). Minimizing total operating expenses (transportation, inventory and manufacturing), or maximizing gross profit of products distributed through the supply chain.