A two-stage stochastic programming method for designing multi-stage global supply chains with stochastic demand

MaRDI QIDQ617085zbMATH OpenFDO

Authors Behnaz Saboonchi, Guoqing Zhang

Publication date 21 January 2011

Published in International Journal of Operational Research (Search for Journal in Brave)

zbMATH Keywords

global supply chainsmixed-integer programmingSCMstochastic programmingsupply chain management

Mathematics Subject Classification ID

Stochastic network models in operations research (90B15) Mixed integer programming (90C11) Stochastic programming (90C15)

Review text

Summary: This paper encompasses the design of a multi-stage global supply chain with stochastic demand. The network consists of manufacturing sites, distribution centres and retail zones situated at both domestic and international locations. Tactical level decisions to be made are the selection of international outsourcing partners, transportation modes and the capacity of each facility. To provide a practical decision support tool for the design of global supply chains, we consider the existence of exchange rate variations and the presence of economies of scale in production which lead to different capacity expansion and outsourcing policies. We formulate the problem as a mixed-integer programming (MIP) model with the objective of minimising the overall costs and maximising the expected average service level. A two-stage stochastic programming method is used to handle the stochasticity in demand. Finally, the proposed model is applied to various cases to demonstrate its applicability in facilitating decision making for managers.

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• Tactical supply chain planning under uncertainty with an application in the wind turbines industry
• A multi-stage stochastic program for supply chain network redesign problem with price-dependent uncertain demands
• A multi-stage supply chain network design problem with in-house production and partial product outsourcing
• Supply chain networks with global outsourcing and quick-response production under demand and cost uncertainty
• Simultaneous production of market-specific and global products: A two-stage stochastic program with additional demand after recourse

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