Nowadays, in highly competitive global markets and constant pressure to reduce total costs, enterprises consider group technology and Supply Chain Management (SCM) accordingly and usually separately as the key elements for intra and inter facilities improvement. Simultaneous consideration of the
elements of these two disciplines in an integrated design can result in higher efficiency and effectiveness. A three-echelon supply chain that has several markets, production sites, and suppliers is designed again in this paper as a
Cellular Manufacturing System (CMS). Every product can be manufactured in the CMS through alternative process routings, in which machines are likely to fail. A linear integer programming model is presented here that seeks to
minimize the intercellular movement, procurement, production, and machine breakdown costs. We present a number of illustrative examples to demonstrate the effectiveness of the integrated design. The proposed examples reveal that
although the procurement and logistics costs increase slightly in the integrated design, the total cost is dropped considerably
