A service-oriented material management model with green options

Abstract

The debate on the sustainability of service supply chain has recently become notorious with the increased environmental and economic impacts of service materiality. Cost-effective material management in the service domain has, therefore, become a competitive priority and a means for sustainability. This essentially requires the development of quantitative models with green options for optimizing material sourcing, transportation, inventory, processing, and reverse logistics. It is, however, a challenge to assess and integrate the economic and environmental costs of material procurement and consumption within service systems. The gap is more evident in service-only supply chains such as tourism, finance, and healthcare. Thus, this paper develops a service-oriented optimization model with green options for effective material management in a service environment. The developed model is focused on managing the material procurement and processing across the supply chain of a service firm (a hotel supply chain as an example). Mathematical formulation is first provided for a deterministic single-order model and this is then extended to a multi-period comprehensive material planning model. Proposed formulations are demonstrated through a simulated supply chain of accommodation services in a hotel. The theoretical and practical implications of the results are discussed along with directions for future research. The value-added of this research is providing insight into material management across service supply chains, optimizing material assignment to offered services, and extending the impacts of green options to the whole supply chain of hotels and accommodation services.