Journal of the Korea Management Engineers Society (한국경영공학회지)

Korea Management Engineers Society (한국경영공학회)
권호 표지

An Optimal Supply Chain Design with Demand and Cost Uncertainty using a Mixed Integer Two-stage Stochastic Programming

수요와 운송비 불확실성을 고려한 2단계 혼합정수 추계법 기반의 최적 공급사슬 설계

  • Chu, Bong-Sung (Department of International Trade, Soonchunhyang University)
  • Published : 2012.07.31
⟨ Previous Next ⟩

Abstract

Taking various uncertainties and factors into account when large-scale systems are designed is an extremely complicated task and often challenging, such as a decision making in supply chain network design with transportation mode selection and warehouse location under fluctuated customer demand and transportation cost environment. For an optimal supply chain network design considering the supply chain risks, this paper proposes a mixed integer two-stage stochastic programming whose objective is the minimization of expected total operating cost of a supply chain network: a binary decision variable is introduced for transportation mode selection and warehouse location in the first stage, and product flow volume is determined in the second stage. With a set of different scenarios, we investigate the influence of uncertainty on supply chain design decisions and conduct computational experiments for three cases. Under any possible realizations of random data, experimental results prove effectiveness of optimal stochastic solutions proposed in achieving flexible supply chain network design.

Keywords

References

  1. J. F. Cordeau, F. Pasin and M. M. Solomon(2006), An integrated model for logistics network design, Annals of Operations Research, 144(1): 59-82
  2. E. Eskigun and R. Uzsoy(2005), Outbound supply chain network design with mode selection, lead times and capacitated vehicle distribution centers, European Journal of Operational Research, 165(1): 182-206
  3. F. V. Louveaux(1986), Discrete stochastic location models, Annals of Operations Research, 6: 23-34
  4. T. Miller, D. Wise, and L. Clair(1996), Transport network design and mode choice modeling for automobile distribution: A case study, Location Science, 4(1-2): 37-48
  5. S. A. MirHassani, C. Lucas, G. Mitra, E. Messina, and C. A. Poojari(2000), Computational solution of capacity planning models under uncertainty, Parallel Computing, 26(5): 511-538
  6. T. Santoso, S. Ahmed, M. Goetschalckx, and A. Shapiro(2005), A stochastic programming approach for supply chain network design under uncertainty, European Journal of Operational Research, 167(1): 96-115
  7. P. Tsiakis, N. Shah, and C. C. Pantelides(2001), Design of multi-echelon supply chain networks under demand uncertainty, Industrial and Engineering Chemistry Research, 40(16): 3585-3604
  8. Amiri, A.(2006). Designing a distribution network in a supply chain system: Formulation and efficient solution procedure, European Journal of Operational Research, 171(2): 567-576