Journal Article

Robust supply chain network design: an optimization model with real world application

Fahimnia, Behnam, Jabbarzadeh, Armin, Zokaee, Shiva, Sadjadi, Seyed Jafar

2017

Overview

This paper presents a robust optimization model for the design of a supply chain facing uncertainty in demand, supply capacity and major cost data including transportation and shortage cost parameters. We first present a base model that aims to determine the strategic ‘location’ and tactical ‘allocation’ decisions for a deterministic four-tier supply chain. The model is then extended to incorporate uncertainty in key input parameters using a robust optimization approach that can overcome the limitations of scenario-based solution methods in a tractable way, i.e. without excessive changes in complexity of the underlying base deterministic model. The application of the approach is investigated in an actual case study where real data is utilized to design a bread supply chain network. Numerical results obtained from model implementation and sensitivity analysis experiments arrive at important managerial insights and practical implications.

• Publisher: Springer US,Springer,Springer Nature B.V
• Subject: Business and Management / Business logistics / Combinatorics / Design optimization / Methods / Network design / Operations research / Operations Research/Decision Theory / Optimization / Optimization models / Optimization theory / Parameter robustness / Robustness (mathematics) / Sensitivity analysis / Supply chains / Theory of Computation / Uncertainty