The Facility Location Problem Integrating Sustainability, Tax and Cross-Country Duty Factors : A Multi-Objective Optimization Approach

In recent years, multinational corporations (MNCs) have shifted their decision-making strategies from solely focusing on economic factors to adopting a sustainable perspective that considers environmental and social impacts. Consequently, the sustainable facility location problem (SFLP) has emerged as a critical topic in supply chain management (SCM), particularly in the face of global supply network disruptions caused by natural disasters, pandemics, and political tensions. The SFLP aims to determine the optimal location of facilities while meeting the flow requirements within the logistics network. In this paper, we not only incorporate environmental and social factors into the decision-making process but also address the tax burden and cross-country implications in logistic operations, which are crucial considerations for MNCs in their supply chain network design. We demonstrate our systematic approach using a real case study involving a global home appliance corporation that seeks to identify the optimal location(s) for their new facilities worldwide. The objective of this paper is to develop a Multi-Objective Mixed Integer Sustainable Facility Location Problem that takes into account trade-offs across all sustainable pillars, including fiscal considerations. We employ both exact and non-exact methods to solve this model and generate non-dominated (ND) points, and subsequently compare the Pareto solutions. To evaluate the application of the proposed approach, we formalize three possible scenarios. Additionally, a sensitivity analysis is conducted on a subset of parameters to generalize the applicability of our approach. The results indicate that opening multiple facilities is preferable to a single facility when environmental and social considerations are also taken into account